When cash is deposited at a bank, the composition of the money supply is changed but the total supply of money
is not.

Question

Quizplus · Accepted Answer

When cash is deposited at a bank, it becomes part of the demand deposits which are included in the M1 money supply. However, the total supply of money does not change as the cash deposited is simply being transferred from one form (physical cash) to another form (demand deposits).

When Cash Is Deposited at a Bank, the Composition of the Money