The change in demand deposits varies directly with

Question

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The change in demand deposits, also known as the money supply, is directly related to the monetary base. This is because changes in the monetary base, such as open market operations by the Federal Reserve, affect the amount of reserves banks hold and thus their ability to make loans and create demand deposits. The currency ratio (A) and the reserve ratio on demand deposits (B) may also impact the money supply, but not necessarily in a direct or consistent manner. The reserve ratio on time deposits (D) would not have a direct impact on demand deposits, as time deposits cannot be withdrawn on demand.

The Change in Demand Deposits Varies Directly with