Final answer:
When Janet withdraws cash from her checking account, the currency in circulation decreases, bank reserves increase, and the size of the monetary base decreases.
Step-by-step explanation:
When Janet withdraws cash from her checking account, the currency in circulation will decrease. This is because the cash that Janet withdrew is no longer within the banking system and is now in her possession. As a result, there is less currency available in circulation.
Bank reserves, on the other hand, will increase. When Janet withdraws cash, the bank needs to have enough reserves to cover the amount she is withdrawing. The bank will adjust its reserves accordingly to ensure it meets the required reserve ratio.
Finally, the size of the monetary base will decrease. The monetary base consists of currency in circulation (which is decreasing in this scenario) and bank reserves (which are increasing). Since the currency in circulation is decreasing, the overall size of the monetary base will also decrease.