Which of the following would not be a consequence of negative interest rates?
A) People's deposits in banks would have shrinking balances over time.
B) Reduced bank reserves that could cause a contraction in the economy.
C) People would want to put more money in banks.
D) People would rather hold cash than bank deposits.

Question

Quizplus · Accepted Answer

Negative interest rates would discourage people from keeping their money in banks, as they would be losing value over time. This would lead to a decrease in deposits, not an increase (option C). Options A and D are potential consequences of negative interest rates, while option B refers to the impact on bank reserves, which may be reduced if people start to withdraw their deposits from banks.

Which of the Following Would Not Be a Consequence of Negative