During a Bank Run,depositors Decide to Hold More Currency Relative

question 18

Multiple Choice

During a bank run,depositors decide to hold more currency relative to deposits and banks decide to hold more excess reserves relative to deposits.

• A)Both the decision to hold relatively more currency and the decision to hold relatively more excess reserves would make the money supply increase.
• B)Both the decision to hold relatively more currency and the decision to hold relatively more excess reserves would make the money supply decrease.
• C)The decision to hold relatively more currency would make the money supply increase.The decision to hold relatively more excess reserves would make the money supply decrease.
• D)The decision to hold relatively more currency would make the money supply increase.The decision to hold relatively more excess reserves would make the money supply decrease

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Definitions:

Adjusting Entry

An accounting entry made at the end of an accounting period to allocate income and expenditure to the appropriate period, ensuring that financial statements adhere to the accrual basis of accounting.

Recorded

The process of documenting financial transactions in accounting records or journals.

Adjusting Entries

Journal entries made in accounting records to correct or update financial transactions, often at the end of an accounting period.

Prepaid

Expenses paid in advance for goods or services, which are then recognized over time as the benefits are received.