The purchase of $1 million of government securities by the Bank of Canada, if there is no change in the quantity of currency, will cause reserves at banks to

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When the Bank of Canada buys $1 million of government securities, it pays for them in reserves that the seller banks will deposit in their accounts at the Bank of Canada. Since the purchase increases the total amount of reserves in the banking system, and assuming that the required reserve ratio is unchanged, the reserves of banks should increase by the exact amount of the purchase, which is $1 million.

The Purchase of $1 Million of Government Securities by the Bank