3 years ago

Question 1(Multiple Choice Worth 3 points)

1 answer:

6 0

Is unchanged, increases.
(Depositing money into a bank reduces currency and increases demand deposit by equal amounts. If the bank keeps this entire deposit as part of its reserves, the $100 deposit has no effect on the money supply. However, if the bank lends a portion of the deposit-say $10-that portion now exists both as a demand deposit and as currency, thereby increasing the money supply.

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