When people withdraw money from their deposits in the banking system, the
A) excess reserves of the banking system will decrease.
B) excess reserves of the banking system will increase.
C) excess reserves of the banking system will not be affected.
D) money supply will immediately decrease.

Question

Quizplus · Accepted Answer

When people withdraw money from their deposits, banks have less money to hold as reserves, which decreases their excess reserves.

When People Withdraw Money from Their Deposits in the Banking