Which of the following transactions results in bank A destroying private money in its own bank?...
Which of the following transactions results in bank A destroying private money in its own bank?
| A. |
Bank A receives interest for a loan whose borrower is a depositor at the bank. |
|
| B. |
Bank A pays interest on the term deposits of its customer. |
|
| C. |
Bank A's customer receives a rent from a customer from another bank. |
|
| D. |
Bank A buys a share issued by its depositor. |
Homework Answers
The correct option is B. Bank A pays interest on the term deposits of its customer.
All other options does not imply destroyed money. Whereas option two implies destroyed money. When loans are repaid Money gets destroyed by bank. Similarly, when Bank A pays interest on the term deposits of it's customer it tend to destroy money.
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