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Other Things Being Constant,if the Public Decides to Hold More

Question 3

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Other things being constant,if the public decides to hold more money in the form of currency rather than chequing deposits,what will be the effect on bank reserves and M2?


A) Bank reserves will increase, and M2 will ultimately decline as well.
B) Bank reserves will decline, and M2 will ultimately increase as well.
C) Bank reserves will decline, and M2 will ultimately decline as well.
D) Bank reserves will increase, and M2 will ultimately increase as well.

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