Assuming all else equal,what is likely to happen to the demand curve for reserves in an economy if the economy goes through a period of rapid expansion?
A) The demand curve for reserves will shift to the right.
B) The demand curve for reserves will shift to the left.
C) There will be a downward movement along the demand curve for reserves.
D) There will be an upward movement along the demand curve for reserves.

Question

Quizplus · Accepted Answer

During a period of rapid economic expansion, banks typically see an increase in loan demand as businesses and consumers seek more credit for investment and spending. This leads to an increased demand for reserves by banks to meet the higher demand for loans, causing the demand curve for reserves to shift to the right.

Assuming All Else Equal,what Is Likely to Happen to the Demand