Question

When an individual withdraws funds from a checking account the: Select one: a. bank's balance sheet shrinks but the size of the Fed's balance sheet increases. b. size of the bank's balance sheet stays the same but the size of the Fed's balance sheet shrinks. c. bank's balance sheet shrinks but the size of the Fed's balance sheet is not affected. d. bank's balance sheet shrinks and so does the Fed's balance sheet.

Answer 1

Answer:

c. bank's balance sheet shrinks but the size of the Fed's balance sheet is not affected

Explanation:

In the case when an individual withdraws the amount from the checking account so the balance sheet of the bank should shrink but overall the size of the balance sheet of fed is not impacted

So according to the given situation, the option c is correct

Hence, the same should be considered