While the withdrawal of cash from banks does not affect money supply immediately, it will affect the banking
system's lending capacity, which will eventually lead to a contraction in money supply.

Question

Quizplus · Accepted Answer

Withdrawing cash from banks reduces the amount of reserves that banks have, which in turn reduces their ability to lend money. This reduction in lending capacity eventually leads to a contraction in the overall money supply.

While the Withdrawal of Cash from Banks Does Not Affect