During wars the public tends to hold relatively more currency and relatively fewer deposits.This decision makes reserves
A)and the money supply increase.
B)and the money supply decrease.
C)increase,but leaves the money supply unchanged.
D)decrease,but leaves the money supply unchanged.

Question

Quizplus · Accepted Answer

During wars, people prefer holding currency over deposits due to uncertainty, leading to a decrease in bank reserves and a contraction in the money supply as banks have less capacity to create loans.

During Wars the Public Tends to Hold Relatively More Currency