When the Bank of Canada extends a loan to a bank, the monetary base ________ and reserves ________.

Name: When the Bank of Canada extends a loan to a bank, the monetary base ________ and reserves ________.
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When the Bank of Canada extends a loan to a bank, it increases the monetary base as it is injecting new reserves into the system, and it also increases reserves held by the borrowing bank. This is because the borrowing bank now has more funds available to lend out, thus increasing its reserves.

When the Bank of Canada Extends a Loan to a Bank