Question

When a bank makes a loan to someone, it lends ((transaction account (which is part of the money supply), U.S. government security, required reserves, excess reserves)) and the loan gives rise to/creates a ((transaction account (which is part of the money supply), U.S. government security, required reserves, excess reserves))

Only 1 answer each part

Answer 1

Banks accept deposits and make loans.

However, banks has to keep a poprtion of their deposits as required reserves and rest of the portion of deposits referred to as excess reserves are used for making loans.

When bank makes a loan then it opens a transaction account in the name of borrower with the amount of loan. The borrower can withdraw the amout of loan from this account as and when he needs it.

Thus,

When a bank makes a loan to someone, it lends excess reserves and the loan creates a transaction account (which is part of the money supply).