Suppose That the Cash Drain in the Banking System Increases

question 52

Multiple Choice

Suppose that the cash drain in the banking system increases during holiday periods.As a result,

• A)the capacity of the banking system to create deposit money is dampened during holiday periods.
• B)the capacity of the banking system to create deposit money is increased during holiday periods.
• C)commercial banks decrease their target reserve ratios.
• D)changes in reserves will result in no change in deposits during holiday periods.
• E)the money supply will automatically increase.

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