Explain why depositing cash into a checking account does NOT change the money supply

What will be an ideal response?


The deposited cash reduces the currency being held by the public by the same amount as the increase in the checking account. Since currency held by the public and checking accounts are both included in the supply of money, the total money supply does not change—only the location of the money has changed.

Economics

You might also like to view...

The figure above could represent the long-run equilibrium for a

A) perfectly competitive firm. B) monopolistically competitive firm. C) monopoly. D) firm facing inelastic demand at all outputs.

Economics

In monopolistic competition, excess capacity results from

A) the presence of a large number of buyers. B) the mobility of firms into and out of the industry. C) imperfect information about price. D) product differentiation.

Economics

One reason the supply and demand model might not be appropriate to the health-care industry?

A) Consumers do not have full information. B) Providers do not know the demand for health-care services. C) Consumers do not know how to value their own health. D) The costs of finding a doctor are too low.

Economics

Expected value is

a. (Probability of state A+Value in state A) (Probability of state B+Value in state B) b. (Probability of state AValue in state A)+(Probability of state BValue in state B) c. (Probability of state AValue in state A)-(Probability of state BValue in state B) d. (Probability of state A-Value in state A) (Probability of state B-Value in state B)

Economics