Someone please help PLESS

Allen deposits $2,000 in his local bank. He earns 2 percent interest each year on his deposit. Jessica borrows $1,000 from the same bank. She is charged a 7 percent interest rate on the borrowed money. How do these bank practices affect the money supply in the community?

A) In Allen's case, but not Jessica's, the money supply decreases.

B) In both Allen's and Jessica's cases, the money supply decreases.

C) In Jessica's case, but not Allen's, the money supply stays the same.

D) In neither Jessica's nor Allen's case does the money supply increase.

These bank practices affect the money supply in the community because in Allen's case, but not Jessica's, the money supply decreases.

What is money supply?

The money supply refers to the total amount of currency held by the public at any given time. There are a variety of methods to define “money,” but the most common indicators are currency in circulation and demand deposits.

In the given case, Jessica finished the duty of borrowing money for $1,000 from the bank and withdrawing funds.

Allen made a monetary deposit, increasing the bank's cash flow. These funds are frequently borrowed by other customers who take out bank loans, like Jessica did.

Therefore, option A is correct.

To learn more about the money supply, refer to:

https://brainly.com/question/14041873

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