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3. In each of the following cases, what would you expect to happen to currency-deposit ratio?...

3. In each of the following cases, what would you expect to happen to currency-deposit ratio? a. Interst rates on demand deposits rise b. A rise of underground economic Activity c. A tremendous wave of counterfeight bills hits Turkey.

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a. As interest on demand deposits rises, people will prefer to keep their moneh more in demand deposits as they will earn more interest on that as a result currency to deposit ratio will decrease.

b. A rise in underground activity will increase thecurrency to deposit ratio as underground activity is done mainly through cash.

c. A wave of counterfeit currency in turkey will lead to decrease in currency to deposit ratio as counterfeit money will create a panic among the general public as a result people will keep their money more in banks.

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