Question: Assume that Smith deposits $75 in currency into her checking account in the XYZ Bank. Later that same day, Jones negotiates a loan for $800

Assume that Smith deposits $75 in currency into her checking account in the XYZ Bank. Later that same day, Jones negotiates a loan for $800 at the same bank. In what direction and by what amount has the supply of money changed?

increased by $800
decreased by $75
increased by $875
increased by $75

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