Suppose That in a Country People Gain More Confidence in the Banking

question 126

Multiple Choice

Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits, then bank reserves will

• A) decrease and the money supply will eventually decrease.
• B) decrease and the money supply will eventually increase.
• C) increase and the money supply will eventually decrease.
• D) increase and the money supply will eventually increase.

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Definitions:

Selling Price

The cost at which a good or service is made available for purchase to consumers.

Traceable Fixed Expense

Fixed costs that can be directly linked to a specific business segment or product line.

Net Operating Income

The profit a company makes from its operations, exclusive of taxes and other non-operational expenses.

Price Hike

An increase in the selling price of goods or services, often due to increased production costs or higher demand.