Question

If people's trust in the banking system is reduced due to a surge in bank failures, the money expansion resulting from a new deposit will:____________
a) increase
b) decline
c) not be affected
d) none of the above

Answer 1

Answer:

b) decline

Explanation:

If people's trust in the banking system is reduced due to a surge in bank failures, the money expansion resulting from a new deposit will decline. This happens because people lost trust and hastily withdrawn their money deposited with the bank.