A Desire by Has No Effect on the Ability of the Banking

Multiple Choice

A desire by has no effect on the ability of the banking system to create bank deposits, for a given amount of reserves in the banking system.

A) households to increase the fraction of their money held in the form of currency
B) banks to delay making loans in expectation of higher future interest rates
C) firms to reduce their desired level of borrowing from banks
D) households to hold more money in safety- deposit boxes
E) the government to increase its level of spending