Multiple Choice
Suppose the desired reserve ratio is 20 percent, and the Bank of Canada buys a $10,000 security from a depository institution that currently has no excess reserves.How is the money supply affected, using the simple multiplier?
A) The money supply increases by $5,000.
B) The money supply decreases by $5,000.
C) The money supply increases by $50,000.
D) The money supply decreases by $50,000.
Correct Answer:
Verified
Correct Answer:
Verified
Q55: Suppose r is the desired reserve ratio.Which
Q56: Suppose Gloria borrows $1,000 to purchase a
Q57: Which of the following is a strategy
Q58: What do open market operations involve? <br>A) opening
Q59: The Bank of Canada performs all of
Q61: What phrase can sum up the practice
Q62: Suppose a cheque is cleared against Bank
Q63: Suppose the Bank of Canada purchases $5,000
Q64: Suppose the Bank of Canada wishes to
Q65: Suppose a bank lends Henry $1,000 to