Question

For a bank, when a person deposits money into the bank, this: a creates a liability and an asset for the bank. b creates a liability for the depositor. c is most likely to result in a decrease in the money supply. d creates only a liability for the bank. e creates only an asset for the bank.

Answer 1

The answer is A.

Step-by-step explanation:

Bank deposits from customers create both a liability and an asset for the bank.

1. As a liability: The deposit is the customer's money. The bank is keeping the money for the customer. The customer can withdraw the fund any time.

2. As an asset: The money deposited by the customer can be used by the bank to generate revenue pending when the customer withdraws the money. The money not yet withdrawn by customers is still in the possession of the bank and the bank controls it.