When a Bank Deposit Is Withdrawn and Kept as Currency

question 213

Multiple Choice

When a bank deposit is withdrawn and kept as currency, bank reserves decrease and the:

• A)monetary base decreases.
• B)monetary base does not change.
• C)monetary base increases.
• D)money supply decreases.

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Definitions:

Profit

The financial gain obtained when the amount earned from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Selling Price

The amount at which an item or service is sold to the customer.

Outstanding Balance

The amount of money owed on a loan or credit account that has not yet been repaid.

Invoice

A document indicating a transaction between a buyer and a seller, listing the goods or services provided along with their prices and the total amount due.