Multiple Choice
The size of the effect of a given deposit of cash into a demand deposit account on the money supply is greater:
A) the greater the fraction of money people want to hold as currency and the greater the fraction of deposits banks want to hold as excess reserves.
B) the greater the fraction of money people want to hold as currency and the smaller the fraction of deposits banks want to hold as excess reserves.
C) the smaller the fraction of money people want to hold as currency and the greater the fraction of deposits banks want to hold as excess reserves.
D) the smaller the fraction of money people want to hold as currency and the smaller the fraction of deposits banks want to hold as excess reserves.
Correct Answer:
Verified
Correct Answer:
Verified
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