Absent action by the (Open Market) Desk, an increase in the public's holdings of currency will

Name: Absent action by the (Open Market) Desk, an increase in the public's holdings of currency will
Brand: Quizplus
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Question

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When the public increases its holdings of currency, it means that more cash is being held by individuals rather than being deposited in banks. This reduces the amount of cash banks have on hand, which in turn decreases their reserves. Therefore, the supply of reserves in the banking system is reduced.

Absent Action by the (Open Market) Desk, an Increase in the Public's