The money supply will not increase if you deposit $100 given to you on your birthday in your bank account, and the bank holds all $100 of that money as excess reserves.

Name: The money supply will not increase if you deposit $100 given to you on your birthday in your bank account, and the bank holds all $100 of that money as excess reserves.
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Question

Quizplus · Accepted Answer

If the bank holds all $100 as excess reserves, it means they are not lending or investing that money. Therefore, there will be no increase in the money supply.

The Money Supply Will Not Increase If You Deposit $100