You Withdraw $100 from Your Checking Account

question 49

Multiple Choice

You withdraw $100 from your checking account. How does this affect the money supply and the reserves of your bank?

• A) The money supply increases, and the reserves of your bank decline.
• B) Both money supply and the reserves of your bank increase.
• C) There is no change in the money supply, and the reserves of your bank decline.
• D) The money supply decreases, and the reserves of your bank increase.

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Definitions:

Domestic Surplus

The extra quantity of a good that producers are willing to supply over what is demanded by domestic consumers, often measured when analyzing the impact of international trade.

Tariffs

Taxes on imported goods, implemented by a government to protect domestic industries from foreign competition or to generate revenue.

Textiles

Materials made from fibers, filaments, threads, or yarns, suitable for use in the production of fabrics and other goods.

Price Of Labor

Refers to the wage rate, or the amount of compensation workers receive in exchange for their labor.