Multiple Choice
Suppose the desired reserve ratio is 10 percent.And suppose the Bank of Canada reduces excess reserves by $100,000.How could chequable deposits be affected, assuming no bank holds excess reserves and nobody withdraws cash?
A) Chequable deposits could increase by $10 million.
B) Chequable deposits could increase by $200,000.
C) Chequable deposits could decrease by $1 million.
D) Chequable deposits could decrease by $2 million.
Correct Answer:
Verified
Correct Answer:
Verified
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