If a Number of People Suddenly Deposit into Their Checking

question 99

Multiple Choice

If a number of people suddenly deposit into their checking accounts a great deal of cash previously kept in their pockets or at home, other things constant, their actions will

• A) create excess reserves and place banks in a position to extend additional loans, which will reduce the money supply.
• B) create excess reserves and place banks in a position to extend additional loans, which will expand the money supply.
• C) lead to higher interest rates.
• D) force the Fed to reduce its discount rate.

---

Definitions:

Fugitive Slave Law

Legislation passed in the United States that provided for the return of slaves who escaped from one state into another state or territory.

Rural Republic

A conceptual political entity centered around agrarian values, often idealizing the virtues of rural life and self-sufficiency.

Economic Equality

The principle or condition of having equal access to financial resources and opportunities, aiming to reduce disparities in wealth and income among different population groups.

Urban Democracy

The application of democratic governance in urban areas, emphasizing participation of city dwellers in decision-making processes.