If banks decide to hold a smaller part of their deposits as excess reserves, the money supply will fall, other things equal.

Name: If banks decide to hold a smaller part of their deposits as excess reserves, the money supply will fall, other things equal.
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If banks decide to hold a smaller part of their deposits as excess reserves, the money supply will increase, not fall. This is because banks will have more funds to lend out, leading to an increase in the amount of money in circulation.

If Banks Decide to Hold a Smaller Part of Their