If people distrust commercial banks and withdraw deposits, and the central bank does not respond, what is the new money supply

The new money supply would likely decrease. Here's why:

1. When people distrust commercial banks and withdraw their deposits, they are essentially removing money from the banking system. This is because banks use the deposits they receive to make loans and create new money.

2. If a large number of people withdraw their deposits, banks would have less money to lend out. This could lead to a decrease in the amount of loans banks are able to make, which would reduce the money supply.

3. If the central bank does not respond by injecting more money into the economy (for example, by buying government bonds or lowering reserve requirements), then the money supply would not be replenished.

4. Therefore, the new money supply would likely be lower than before people started distrusting commercial banks and withdrawing their deposits.

Please note that this is a simplified explanation and the actual impact on the money supply would depend on a variety of factors, including the size of the withdrawals and the specific policies of the central bank.