The purchase of government securities from the public by the Bank of Canada will cause:
A)chartered bank reserves to increase.
B)the money supply to increase.
C)demand deposits to increase.
D)all of the above to occur.

Question

Quizplus · Accepted Answer

When the Bank of Canada purchases government securities, it injects money into the banking system, increasing bank reserves, which in turn increases the money supply and demand deposits.

The Purchase of Government Securities from the Public by the Bank