Suppose that the customer of a bank writes a cheque payable to a tennis club who deposits the cheque at the same bank.Which of the following is correct?
A) The bank's loans to customers would increase and demand deposits would decrease.
B) The bank's reserves would increase but its demand deposits would decrease.
C) The bank's reserves would decrease but its demand deposits would increase.
D) The bank's loans to customers would decrease and reserves would increase.
E) The bank's reserves and demand deposits would not change.
Correct Answer:
Verified
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