If you withdraw $100 from your bank, then:
A)the reserves of your bank will initially fall by $100
B)the money supply will initially increase by $100
C)the money supply will initially decrease by $100
D)the required reserves for your bank will fall by more than $100

Question

Quizplus · Accepted Answer

When you withdraw $100 from your bank, the bank's reserves decrease by $100 because it has to provide you with the cash. The money supply does not change because the cash is simply transferred from the bank to you.

If You Withdraw $100 from Your Bank, Then