Final answer:
Making a payment on accounts payable decreases both liabilities and assets. The quantity of loans made and received can increase with a rise in demand or supply. Money on a bank's balance sheet may not be present in cash as it includes loans made to borrowers.
Step-by-step explanation:
The effect of making a payment on accounts payable is option C, which is decreases liabilities and decreases assets. When a payment is made on accounts payable, the company's liabilities decrease because it has fulfilled a portion of its debt obligations. Simultaneously, the company's assets also decrease because it is using its cash reserves to make the payment, reducing the amount of cash on hand.
Regarding the question about changes in the financial market, an increase in the quantity of loans made and received can happen due to a rise in demand for loans or a rise in supply of available funds for lending. In contrast, a fall in demand or a fall in supply would generally lead to a decrease in the quantity of loans made and received.
As for a bank's balance sheet, the money listed under assets may not actually be in the bank because it includes loans that the bank has issued to borrowers, which are assets for the bank until repaid. The value of these assets can be affected by various factors such as the borrower's payment history, changes in the economy's interest rates, and the borrower's financial health.
Lastly, concerning the current account, flows of monies into and out of a country affect its balance of payments. If more money flows out than in, the current account becomes more negative, indicating a deficit. Conversely, if more money flows into the country, the current account becomes less negative or more positive, reflecting a surplus.