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Thought experiment: If all banks were merged into a single monopoly bank, total deposits would… Assume no change in money supply or public preferences. Choose the correct option.

Q: Thought experiment: If all banks were merged into a single monopoly bank, total deposits would… Assume no change in money supply or public preferences. Choose the correct option.

Concept Aggregate deposits depend on money supply, reserve ratios, and public behavior, not on the number of banks per se. Final Answer Remain essentially unchanged

Difficulty: Medium

Remain essentially unchanged
Automatically double
Fall to half
Vanish due to lack of competition

Correct Answer: Remain essentially unchanged

Explanation:

Concept

Aggregate deposits depend on money supply, reserve ratios, and public behavior, not on the number of banks per se.

Final Answer
Remain essentially unchanged

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