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?

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.?

Yes. C is the answer.

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

Yes, the correct answer is C. It would hurt economic growth because banks often lend money to borrowers who then put that money back into circulation.

When individuals keep their money under their mattress instead of depositing it in a bank, they are essentially removing that money from circulation. This means that the money is not available for banks to lend out to borrowers, who would use it for investment and spending, which helps stimulate economic growth.

Banks play a crucial role in the economy by collecting deposits from individuals and businesses and then lending that money to borrowers. This creates a cycle where money is constantly moving and being reinvested. It allows for the financing of new businesses, the acquisition of assets, and other economic activities.

When people choose to keep their money outside of the banking system, this entire cycle is disrupted. Banks have less money available for lending, which can slow down economic growth. Additionally, the lack of money being spent and invested means that businesses may struggle to generate revenue, leading to reduced economic activity.

Therefore, if everyone made the same decision as Carl, it could have a negative impact on the national economy.