Economics Monetary Policy Discussion
I’m trying to study for my Economics course and I need some help to understand this question.
– What would happen to the money supply if the non-bank Public converts some of its
deposits with commercial banks to currency? NB Commercial Banks provides the
currency by selling some of their reserves to the Central Bank.
– Does it matter whether the Commercial Banks have Excess Reserves they can
draw on to provide the currency rather than having to resort to drawing
down Required Reserves?
