You Withdraw $100 from Your Checking Account

question 49

Multiple Choice

You withdraw $100 from your checking account. How does this affect the money supply and the reserves of your bank?

• A) The money supply increases, and the reserves of your bank decline.
• B) Both money supply and the reserves of your bank increase.
• C) There is no change in the money supply, and the reserves of your bank decline.
• D) The money supply decreases, and the reserves of your bank increase.

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Definitions:

Expense Account

An account that records the costs incurred by a company in the process of earning revenue.

Payable Account

An accounting record that shows the total amount of money owed to creditors for goods, services, or loans provided.

Employee Health Insurance

An insurance coverage that provides benefit payments for healthcare services to employees, often paid for wholly or in part by employers.

Retirement Program

A financial plan that provides income to individuals after they have ceased working, often involving contributions from both the employer and employee.