If the Bank of Canada wishes to increase the money supply by $500 when the desired reserve ratio is 10 percent,it should

Name: If the Bank of Canada wishes to increase the money supply by $500 when the desired reserve ratio is 10 percent,it should
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When the Bank of Canada buys $50 of government bonds, it injects money into the banking system. With a reserve ratio of 10%, this $50 can support a money supply increase of $500 through the money multiplier effect (1/0.10 = 10; $50 x 10 = $500).

If the Bank of Canada Wishes to Increase the Money