If you withdraw Rs. 1,00,000 in cash from your Demand Deposit Account at your bank, the immediate effect on aggregate money supply in the economy will be

1. A

   to reduce it by Rs. 1,00,000

   Reduce M3 by ₹1 lakh. Currency in hand is still money.

2. B

   to increase it by Rs. 1,00,000

   Increase by ₹1 lakh. Double-counts; deposits fall as cash rises.

3. C

   to increase it by more than Rs. 1,00,000

   Increase by more. Multiplier talk is not the immediate effect.

4. D

   to leave it unchanged

   Leave it unchanged. Demand deposits fall; currency with the public rises by the same amount. Immediate M3 is the same.

Summary. Official key is (d). Withdrawing cash from a demand deposit swaps one component of money supply for another. Immediately, aggregate money supply is unchanged.