If a person selling bonds to the Bank of Canada cashes the Bank's cheque, then reserves q, and currency in circulation â—» everything efse helf colizuri. A) remain unchanged; declines B) remain unchanged; increases C) decline; remains unchanged D) increase; remains unchanged
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If a person selling bonds to the Bank of Canada cashes the Bank's cheque, then reserves and currency in circulation A) remain unchanged; declines B) remain unchanged; increases C) decline; remains unchanged D) increase; remains unchanged everything else held Show more…
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Assume that the reserve ratio is 5 percent and the Bank of Canada buys a $10,000 bond from a member of the public. As a result: a. Bank reserves are decreased by $10,000. b. The money supply immediately declines by $9,500. c. The money supply is immediately increased by $10,000. d. The money supply immediately declines by $500.
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Suppose that the Federal Reserve (the "Fed") buys $1.5 million of bonds from a bond dealer, who immediately deposits the funds in her checking account. What is the initial impact of this transaction? A. The banking system's holdings of securities rise by $1.5 million, and the banking system's total reserves fall by $1.5 million. B. Checkable deposits rise by $1.5 million, and the banking system's holdings of securities rise by $1.5 million. C. Checkable deposits rise by $1.5 million, and the banking system's total reserves rise by $1.5 million. D. The banking system's holdings of securities fall by $1.5 million, and the banking system's total reserves rise by $1.5 million.
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4i) Suppose the Bank of Canada sells a member bank a $3,000 security, the desired reserve ratio is 20 percent, banks hold no excess reserves, and all loans are redeposited. How is the money supply affected? a. The money supply increases by less than $15,000. b. The money supply decreases by less than $15,000. c. The money supply increases by $15,000. d. The money supply decreases by $15,000. 4ii) If the reserve ratio is 10 percent and a bank receives a new deposit of $20, what happens to the bank's reserves in the longer term? a. Reserves increase by $2. b. Reserves increase by $18. c. Reserves increase by $20. d. Reserves increase by $200.
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