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Assume that an individual deposits $100 previously kept at home into her checking account at the local bank.
Which of the following is TRUE?
The money supply will increase by $100 as checking account balances increase.
The money supply will decrease by $100 as there is less circulating cash.
There will be no change in the money supply as a result of this action.
The money supply will only increase if the bank transfers the new reserves to the central bank.