If there is no change in the quantity of currency,the purchase of $100 million of government bonds by the Bank of Canada will cause reserves at banks to

Question

Quizplus · Accepted Answer

When the Bank of Canada purchases $100 million of government bonds, the banks that sell those bonds receive an increase in their reserves. As a result, bank reserves increase by the exact amount that the Bank of Canada paid for the bonds (in this case, $100 million). Therefore, the correct answer is (B) increase by $100 million.

If There Is No Change in the Quantity of Currency,the