The Commercial Banking System's Ability to Expand Demand Deposits Is

question 35

Multiple Choice

The commercial banking system's ability to expand demand deposits is reduced when

• A) the public wants to hold currency rather than demand deposits.
• B) banks become members of the Federal Reserve System
• C) someone deposits newly printed money in the banking system.
• D) banks reduce their holdings of cash assets and increase business and consumer loans.
• E) the Fed lowers the legal reserve requirement on checkable deposits.

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