Assume that Jones deposits $500 in currency into her checkable deposit account in First National Bank. A half‑hour later Smith obtains a loan for $750 at this bank. By how much and in what direction has the money supply changed? Explain.

money supply increase here $750

Explanation:

given data

deposits = $500

loan = $750

time = half hour

to find out

how much and in what direction has the money supply changed

solution

we know that Currency and check able deposits both are the part of money supply

so that Jones deposit money not impact the money supply

and we know when we go for loan, bank open check able deposit account

so we can say new loan made is = $750

Check able deposit is also part of money supply

so money supply increase here $750