Question

Suppose your payroll check is directly deposited to your checking account. Everything else held constant, total reserves in the banking system ________ and the monetary base ________.

Answer 1

Answer:

remain unchanged; remains unchanged

Explanation:

Bank reserves are the cash holdings of the commercial bank which are held by bank physically and the deposits held in the account of the bank with central bank.

The monetary base is total amount of the bank notes as well as coins which are circulating in economy.

The payroll check is a check which is issued in the payment of the wages or the salary. It is just an issuance from one bank to the another bank. There is no cash deposited or withdrawn in the bank. So, the banking reserves remains unchanged and also there will be no change in the monetary base.