A cash withdrawal reduces deposits,reserves,and excess reserves in the banking system.

Question

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When a customer withdraws cash from their account, the bank's deposits are reduced as the customer's balance decreases. Reserves are also reduced because the bank needs to hold a certain percentage of deposits as required reserves, which will decrease with the decrease in deposits. Excess reserves, which are reserves held by the bank above the required amount, may also be reduced if the withdrawal exceeds the amount of excess reserves held.

A Cash Withdrawal Reduces Deposits,reserves,and Excess Reserves in the Banking