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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Definitions:

Industry

A sector of the economy that produces goods or services, often categorized by similarity in the products or services they provide.

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit changes as more units are produced.

Costs Of Production

Costs of production encompass all expenses incurred in creating a product or service, including materials, labor, and overhead.

Firm

A business organization that sells goods or services to make a profit.