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35 votes
35 votes
If the public decides to hold less currency and more deposits in banks what will happen to the money supply,

interest rate and investment. ?

User Hvintus
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1 Answer

23 votes
23 votes

Answer:

When the public and the banks change the ratio of their currency and reserves to deposits, the Federal Reserve can offset the effect on the money supply by changing reserves and/or currency. ... Conversely, when people hold less money than they want, they spend more slowly, causing prices to fall.

User Sfuerte
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