Give an example of an event that might shift the supply of deposits to the banking...
Give an example of an event that might shift the supply of deposits to the banking industry and explain why this shift results.
Homework Answers
When there is recession and the fed increases the discount rate
then supply of deposits to the banking industry.
This is because during recession bonds and banking industry provide
assured returns as compared to other investment options like
equity, mutual funds,etc. Moreover when interest rates increases
demand for loanable funds decreases and supply of loanable funds
increases . Hence the supply of deposits goes to banks.
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Give an example of an event that might shift the supply of
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