When a Member of the Nonbank Public Deposits Currency into Her

question 44

Multiple Choice

When a member of the nonbank public deposits currency into her bank account,

• A) both the monetary base and bank reserves fall.
• B) both the monetary base and bank reserves rise.
• C) the monetary base falls, but bank reserves remain unchanged.
• D) bank reserves rise, but the monetary base remains unchanged.

---

Definitions:

Macroeconomic Events

Large-scale economic events that affect the economy on a national or global level, such as inflation, unemployment, or fiscal policies.

Unsystematic Risk

The segment of risk that is unique to a specific company or industry, also known as diversifiable risk, which can be mitigated through diversification.

Diversification

Spreading a portfolio over many investments to avoid excessive exposure to any one source of risk.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.