If you decide to hold $100 less cash than usual and therefore deposit $100 more cash in the bank, what effect will this have on checkable deposits in the banking system if the rest of the public keeps its holdings of currency constant? Assume the required reserve ratio is 10% and banks do not hold any excess reserves. A. Checkable deposits fall by $100. B. Checkable deposits increase by $100. C. Checkable deposits fall by $1,000. D. Checkable deposits increase by $1,000. E. Checkable deposits do not change.
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