Suppose That the Cash Drain in the Banking System Increases

Multiple Choice

Suppose that the cash drain in the banking system increases during holiday periods. As a result,

A) the capacity of the banking system to create deposit money is increased during holiday periods.
B) changes in reserves will result in no change in deposits during holiday periods.
C) commercial banks decrease their target reserve ratios.
D) the money supply will automatically increase.
E) the capacity of the banking system to create deposit money is dampened during holiday periods.