contestada

In a 100-percent reserve banking system, if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits a M1 would not change. b M1 might rise or fall. c M1 would increase. d M1 would decrease.

Respuesta :

TomShelby

Answer:

a M1 would not change.

Explanation:

the checkable deposits are part of M1 as well as the currency and coins. Therefore, a component of M1 decrease (currency) while another of M1 (checkable deposits) increase.

As the banking system works with a 100-percent required reserve there is no multiplier effect from the deposit therefore M1 do not change.