All else equal, if people hold a greater proportion of cash instead of bank deposits, the:

CA Foundation · Business Economics · MTP · May 2026
All else equal, if people hold a greater proportion of cash instead of bank deposits, the:
(A) A. Money supply increases
(B) B. Money multiplier increases
(C) C. Money supply decreases
(D) D. Money supply remains unchanged

Suggested Answer and Working Notes:

Correct Answer: Option (C)

C. Money supply decreases

Topics: Money Market

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