Kizspy | Question: 39
(Choose 1 answer)
FUSTER LOW LOM
Suppose households suddenly decide to hold more cash instead of deposits. How will this behavior affect the
banking system's ability to create money?
A. Banks will create more money due to higher reserves.
B. The money supply will increase as people use cash more actively.
C. The money multiplier effect will weaken, reducing money supply growth.
D. There will be no effect, as cash is still part of the money supply.
