A currency drain occurs when the
A)Fed increases the required reserve ratio.
B)Fed sells U.S.government securities.
C)non-bank public increases its holdings of currency outside the banking system.
D)banks reduce the number of loans they create with their excess reserves.
E)Fed buys U.S.government securities.

Question

Quizplus · Accepted Answer

A currency drain occurs when the non-bank public increases its holdings of currency outside the banking system, reducing the amount of funds available for banks to lend out and ultimately decreasing the money supply.

A Currency Drain Occurs When the