Question

If Steffi withdraws​ $400 in cash from her checking​ account, then

A. it is impossible to tell what happens to the reserves.
B. the amount of reserves decline.
C. the amount of reserves rise.
D. the amount of reserves stay the same.

Answer 1

The correct answer to the following question is option B) the amount of reserves would decline.

Step-by-step explanation:

If a person like in this case Steffi , withdraws $400 in cash from her checking account , then there would be an obvious decline in the bank reserves by $400 but here the monetary base would remain unchanged as by taking out the money in cash , the amount money supply among the people in the economy would increase . So therefore the correct option is B .