If a member of the nonbank public sells a government bond to the Bank of Canada in exchange for currency, the monetary base will ________, but ________.

Question

Quizplus · Accepted Answer

When a member of the nonbank public sells a government bond to the Bank of Canada in exchange for currency, the monetary base increases because the central bank is injecting currency into the economy. However, this transaction does not directly affect the reserves held by banks, so reserves remain unchanged.

If a Member of the Nonbank Public Sells a Government