The Size of the Effect of a Given Deposit of Cash

question 103

Multiple Choice

The size of the effect of a given deposit of cash into a demand deposit account on the money supply is greater:

• A)​the greater the fraction of money people want to hold as currency and the greater the fraction of deposits banks want to hold as excess reserves.
• B)​the greater the fraction of money people want to hold as currency and the smaller the fraction of deposits banks want to hold as excess reserves.
• C)​the smaller the fraction of money people want to hold as currency and the greater the fraction of deposits banks want to hold as excess reserves.
• D)​the smaller the fraction of money people want to hold as currency and the smaller the fraction of deposits banks want to hold as excess reserves.

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