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25 June, 05:42

If you deposit $100 of currency into a demand deposit at a bank, this action by itself

a. does not change the money supply.

b. increases the money supply.

c. decreases the money supply.

d. has an indeterminate effect on the money supply.

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Answers (1)
  1. 25 June, 05:52
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    A) Does not change the money supply.

    Explanation:

    Demand deposits change the monetary base, because the monetary base equals currency plus demand deposits.

    However, in itself, a demand deposit does not change the money supply. For the change in the money supply to occur, the bank must loan out some of the money in the deposit.
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Home » Business » If you deposit $100 of currency into a demand deposit at a bank, this action by itself a. does not change the money supply. b. increases the money supply. c. decreases the money supply. d. has an indeterminate effect on the money supply.
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