Harry gets $1,000 in currency from his grandfather when he graduates from college. He deposits these funds into his checking account. What is the impact on the monetary base of Harry's deposit?

Question

Quizplus · Accepted Answer

The monetary base does not change when Harry deposits his $1,000 into his checking account because the physical currency is simply transferred from being held by Harry to being held by the bank. The overall amount of currency in circulation plus reserves held by the bank remains the same.

Harry Gets $1,000 in Currency from His Grandfather When He