Suppose the Bank of Canada raises its target for the overnight interest rate and longer- term rates in the market rise as a result. Households' and firms' demand for loans from the commercial banks would . In order to accommodate this change, the commercial banks require .
A) rise; more currency
B) rise; more government securities
C) remain stable; no change to their reserves
D) fall; fewer cash reserves
E) fall; more cash reserves
Correct Answer:
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Q9: In practise, the Bank of Canada uses
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A)an
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