Suppose the Bank of Canada sells $2 billion of government bonds to the public, which pays for them by drawing cheques.As a result, chartered bank reserves will:

Question

Quizplus · Accepted Answer

When the Bank of Canada sells government bonds, it withdraws money from the banking system, reducing the reserves of chartered banks by the amount of the sale, which is $2 billion in this case.

Suppose the Bank of Canada Sells $2 Billion of Government