Suppose That in a Country People Gain More Confidence in the Banking

question 126

Multiple Choice

Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits, then bank reserves will

• A) decrease and the money supply will eventually decrease.
• B) decrease and the money supply will eventually increase.
• C) increase and the money supply will eventually decrease.
• D) increase and the money supply will eventually increase.

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Definitions:

Capital Expenditures Budget

A financial plan dedicated to the projected spending on long-term assets that will deliver value in the future.

Sales Budget

An estimation of the revenue expected from sales activities over a certain period, used for financial planning and strategy.

Capital Expenditures Budget

A plan for the funds a company intends to spend on major physical assets, aimed at future benefits or investments.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, typically used to ensure that a company can meet its cash needs.