If demand deposits increase,the result is that

Question

Quizplus · Accepted Answer

An increase in demand deposits increases the liabilities of banks, thus raising the amount of required reserves they must hold as per legal requirements. This is because banks are required to have a certain percentage of deposits as reserves to ensure they can meet withdrawal requests and maintain financial stability. Therefore, an increase in demand deposits necessitates an increase in required reserves.

If Demand Deposits Increase,the Result Is That