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

question 259

Multiple Choice

Suppose Simona 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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