In Macroland There Is $1,000,000 in Currency That Can Either

question 47

Multiple Choice

In Macroland there is $1,000,000 in currency that can either be held by the public as currency or deposited into banks.Banks'desired reserve/deposit ratio is 10%.If the public of Macroland decides to hold more currency, increasing the proportion they hold from 50% to 75%, the money supply in Macroland will ______.

• A)increase.
• B)decrease.
• C)remain the same.
• D)either increase or decrease.