Assuming all else equal,a contraction in the quantity of bank account balances will cause ________.
A) a downward movement along the demand curve for reserves
B) an upward movement along the demand curve for reserves
C) the demand curve for reserves to shift left
D) the demand curve for reserves to shift right

Question

Quizplus · Accepted Answer

A contraction in the quantity of bank account balances means that banks have fewer funds to lend out, which leads to a decrease in the demand for reserves. This, in turn, causes the demand curve for reserves to shift left.

Assuming All Else Equal,a Contraction in the Quantity of Bank