Carl decides to keep his money under his mattress instead of putting it in the bank. If everyone made the same decision as Carl, what might the impact be on the national economy?

Question

A. It would not affect the national economy greatly because individuals do not save much money.

B. It would help grow the national economy because the economy usually benefits when money is taken out of circulation.

C. It would hurt economic growth because banks often lend money to borrowers who then put that money back into circulation.

D. It would help economic growth by spurring the sale of mattresses.

Is the answer C.?

Answer 1

Yes. C is the answer.