When an Individual Deposits Currency into a Checking Account

question 26

Multiple Choice

When an individual deposits currency into a checking account:

• A)bank reserves increase, which allows banks to lend more and increases the money supply.
• B)bank reserves decrease, which reduces the amount banks can lend and reduces the growth of the money supply.
• C)bank reserves are unchanged.
• D)bank liabilities increase, which reduces the amount banks can lend and reduces the growth of the money supply.

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