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(a) [15 marks] Suppose the HSBC lends 10 million at interest rate 8% to a firm for the later to buy certain resources. Explain how

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(a) [15 marks] Suppose the HSBC lends 10 million at interest rate 8% to a firm for the later to buy certain resources. Explain how this lending is done via double ledger entries. (b) [5 marks] Explain how this way of lending is related the money creation activity of banks. () [30 marks] Explain the constraints due to which the firm cannot use its own liability to buy the resources

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