A currency drain ________ the amount of bank reserves available to banks to make loans because ________.
A)reduces;people are holding more money outside of the banks
B)increases;people are holding less money outside of the banks
C)reduces;people are holding less money outside of the banks
D)reduces the monetary base;people are holding more money outside of the banks
E)reduces;people are holding onto the money the banks could have borrowed from the Fed

Question

Quizplus · Accepted Answer

A currency drain means that people are holding more money outside of the banks, so there is less money in the banks to lend out as reserves. This reduces the amount of bank reserves available to make loans.

A Currency Drain ________ the Amount of Bank Reserves Available