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

question 107

Multiple Choice

Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits.As a result,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.