A currency drain occurs when the
A)Fed increases the required reserve ratio.
B)Fed buys U.S. government securities.
C)banks reduce the number of loans they create with their excess reserves.
D)non-bank public increases its holdings of currency outside the banking system.
E)Fed sells U.S. government securities.

Question

Quizplus · Accepted Answer

A currency drain occurs when the non-bank public increases its holdings of currency outside the banking system, reducing the amount of reserves in the banking system.

A Currency Drain Occurs When the