If the Bank of Canada decides to switch some of the Government of Canada's deposits held at the Bank to chartered banks, the money supply will:
A)decrease.
B)stay the same.
C)collapse.
D)increase.

Question

Quizplus · Accepted Answer

When the Bank of Canada moves government deposits to chartered banks, it increases the reserves of these banks, allowing them to lend more, thus increasing the money supply.

If the Bank of Canada Decides to Switch Some of the Government