Suppose the Bank of Canada purchases $100 million of government bonds from the public.If the desired reserve ratio is 20 percent and all banks keep zero excess reserves,what will the total impact of this action on the money supply be?
A) $100 million decrease in the money supply
B) $100 million increase in the money supply
C) $200 million increase in the money supply
D) $500 million increase in the money supply
Correct Answer:
Verified
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