How will the purchase of $100 million of government securities by the Bank of Canada change bank reserves and total chequing account deposits in the banking system as a whole? Assume that banks do not hold any excess reserves, that households and firms do not change the amount of currency they hold, and that the desired reserve ratio is 20 percent.

Question

Quizplus · Accepted Answer

The Answer of How will the purchase of $100 million of government securities by the Bank of Canada change bank reserves and total chequing account deposits in the banking system as a whole? Assume that banks do not hold any excess reserves, that households and firms do not change the amount of currency they hold, and that the desired reserve ratio is 20 percent.

How Will the Purchase of $100 Million of Government Securities