Suppose that people become fearful that the commercial banks will
not be able to redeem in cash all the deposits that are likely to
be presented for redemption and, as a result, decide to cash-in
their deposits. In the absence of central bank action this will
1. reduce the stock of base money.
2. reduce the stock of money.
3. increase the stock of money.
4. increase the money multiplier.
Choose the correct option.