This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: When a commercial bank lends 1000 to a customer A) M1 and M2 decline by 1000. B) M1 and M2 rise ... (Read 152 times)

jake

  • Hero Member
  • *****
  • Posts: 538
on: Jun 29, 2018
When a commercial bank lends 1000 to a customer
 
  A) M1 and M2 decline by 1000.
  B) M1 and M2 rise by 1000.
  C) M1 rises but M2 does not change.
  D) there is no change in M1 or M2 until the loan proceeds are spent.

Question 2

Differentiate between principal and time value of money. John invests 100 in a bank for a year. At the end of the year he receives 125. What is the principal and time value of money in this case?
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

cpetit11

  • Sr. Member
  • ****
  • Posts: 321
Reply #1 on: Jun 29, 2018
Answer to Question 1

B

Answer to Question 2

The amount of the original investment is referred to as principal, while time value of money is the interest or payment received for temporarily giving up the use of money that has been invested.
In this case 100 is the principal, while (125 - 100 ) or 25 is the time value of money.


jake

  • Hero Member
  • *****
  • Posts: 538
Reply #2 on: Jun 29, 2018
Correct answers!


cpetit11

  • Sr. Member
  • ****
  • Posts: 321
Reply #3 on: Jun 29, 2018
Great! Please up vote :D


« previous next »
 

Did you know?

The heart is located in the center of the chest, with part of it tipped slightly so that it taps against the left side of the chest.

Did you know?

In 2010, opiate painkllers, such as morphine, OxyContin®, and Vicodin®, were tied to almost 60% of drug overdose deaths.

Did you know?

Side effects from substance abuse include nausea, dehydration, reduced productivitiy, and dependence. Though these effects usually worsen over time, the constant need for the substance often overcomes rational thinking.

Did you know?

Computer programs are available that crosscheck a new drug's possible trade name with all other trade names currently available. These programs detect dangerous similarities between names and alert the manufacturer of the drug.

Did you know?

Drugs are in development that may cure asthma and hay fever once and for all. They target leukotrienes, which are known to cause tightening of the air passages in the lungs and increase mucus productions in nasal passages.

Pacific hagfish at 150 meters depth, California, Cordell Bank National Marine Sanctuary. Pacific hagfish at 150 meters depth, California, Cordell Bank National Marine Sanctuary.
The Decline of Two-Parent Families The Decline of Two-Parent Families
Lean 6 sigma - Fishbone Diagram - CAUSES & Effects OF LOW CUSTOMER SATISFACTION Lean 6 sigma - Fishbone Diagram - CAUSES & Effects OF LOW CUSTOMER SATISFACTION
Sea-Level Rise Sea-Level Rise
Total allowable and actual catch, Grand Bank Atlantic Cod 1959 -2012 Total allowable and actual catch, Grand Bank Atlantic Cod 1959 -2012
The Rise and Fall of Separation Anxiety The Rise and Fall of Separation Anxiety
Video: Electrical changes in the heart

For a complete list of videos, visit our video library