Suppose your payroll check is directly deposited to your checking account. Everything else held constant,total reserves in the banking system ________ and the monetary base ________.

Question

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When a payroll check is directly deposited to a checking account, there is no change in the amount of physical currency in circulation or held by banks, so total reserves in the banking system remain unchanged. Additionally, the act of direct deposit does not increase or decrease the amount of money in circulation, so the monetary base remains unchanged as well.

Suppose Your Payroll Check Is Directly Deposited to Your Checking