If you deposit $100 of currency into a demand deposit at a bank, this action by itself
A) does not change the money supply.
B) increases the money supply.
C) decreases the money supply.
D) has an indeterminate effect on the money supply.

Question

Quizplus · Accepted Answer

Depositing currency into a demand deposit does not change the money supply because the currency is simply converted into a different form of money (from physical cash to a bank deposit), but the total amount of money in the economy remains the same.

If You Deposit $100 of Currency into a Demand Deposit