If the Fed Increases Reserves in the Banking System

question 8

Multiple Choice

If the Fed increases reserves in the banking system,

• A)deposit holdings will decrease, and currency holdings will increase.
• B)deposit holdings will increase, and currency holdings will fall.
• C)deposit and currency holdings will decrease.
• D)both deposit and currency holdings will increase.
• E)deposits will increase, and currency holdings by the public will not be affected.

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