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No, in the United States banking system, when a bank loan is repaid, the money supply goes down by the amount of the principal that was paid off. When banks lend out money, that money is created out of thin air by a accounting journal entry, and the money supply goes up by the amount of the loan. When the loan gets paid off, that money disappears back into thin air and the money supply goes back down.
What else can I help you with?
Why was the creation of a national bank so important to the U.S economy?
The national bank controlled the money supply
What is the difference between a bank loan and notes payable?
I think a bank loan is when money is borrowed from a bank with the expectation that it will be repaid, and notes payable is then the accumulation of all loan amounts expected to be repaid according to each note (the legal document with the stipulations).
What is the immediate effect of her deposit on the money supply?
The immediate effect of her deposit on the money supply is that it increases the reserves of the bank, allowing the bank to lend more money. When she deposits funds, the bank is required to hold a fraction as reserves but can lend out the excess, effectively creating new money through the lending process. This process can lead to a multiplier effect, where the initial deposit results in a greater overall increase in the money supply as loans are made and re-deposited.
What does Loan Loss allowance mean?
Amount of money that a bank might lose because of its loan not being fully repaid.
Do you owe the bank anything if you stop making mortgage payments?
If the bank loaned you the money for the morgage and have not repaid it all then yes you do. Or any other outstanding debts you may have with them
When a bank loan is repaid, how does it impact the supply of money in the economy?
When a bank loan is repaid, it reduces the money supply in the economy because the money that was borrowed and created through the loan is returned to the bank, effectively decreasing the amount of money available for lending and spending.
What do the feds want to do to the money supply to encourages bank loans?
increase
Why was the creation of a national bank so important to the U.S economy?
The national bank controlled the money supply
What is the difference between a bank loan and notes payable?
I think a bank loan is when money is borrowed from a bank with the expectation that it will be repaid, and notes payable is then the accumulation of all loan amounts expected to be repaid according to each note (the legal document with the stipulations).
How does increasing money supply affect expansionary monetary policy?
Expansionary Monetary Policy is adopted by the monetary authorities to increase the money supply of an economy. If money supply is increasing, and central bank adopts an expansionary monetary policy, it would result in inflationary pressures.
What is the immediate effect of her deposit on the money supply?
The immediate effect of her deposit on the money supply is that it increases the reserves of the bank, allowing the bank to lend more money. When she deposits funds, the bank is required to hold a fraction as reserves but can lend out the excess, effectively creating new money through the lending process. This process can lead to a multiplier effect, where the initial deposit results in a greater overall increase in the money supply as loans are made and re-deposited.
Why is the supply of money in an economy not solely determined by central bank?
The supply of money IS controlled by the central bank. However, in some countries the politicians interfere with the Central Bank.
What factors determine money supply?
factors which determine money supply is: open market operations, variable money supply bank rate policy.
What does Loan Loss allowance mean?
Amount of money that a bank might lose because of its loan not being fully repaid.
Do you owe the bank anything if you stop making mortgage payments?
If the bank loaned you the money for the morgage and have not repaid it all then yes you do. Or any other outstanding debts you may have with them
What are the factor that effect money supply?
Bank rate
Will money supply increase decrease or stay the same if banks cannot find borrowers?
inflation It depends on the definition of money you are using. If your definition includes "bank credit", the supply clearly falls. If you are using M0 money defition, is does not matter (if the question involves the IS-LM graph, use this answer)
