When a customer demands additional currency and cashes a check for $500, all of the following occur except

Question

Quizplus · Accepted Answer

Federal Reserve notes actually increase in circulation when a customer cashes a check for $500, as the bank gives out physical currency to the customer. Choices A, B, and D describe direct consequences of the transaction on the bank's financial position, but Federal Reserve notes in circulation increase when cash is withdrawn.

When a Customer Demands Additional Currency and Cashes a Check