Suppose Laqueta Deposits $10,000 of Cash into a Checking Account

question 179

Multiple Choice

Suppose Laqueta deposits $10,000 of cash into a checking account at a commercial bank. The immediate effect is

• A) a $10,000 decrease in the M1 money supply.
• B) no change in the M1 money supply, but in the future, the M1 money supply will tend to decrease because the bank now has excess reserves.
• C) no change in the M1 money supply, but in the future, the M1 money supply will tend to expand because the bank now has excess reserves.
• D) a $10,000 increase in the M1 money supply.

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