If a bank's deposits at the Bank of Canada increase by $1 million,then
A) the bank's assets increase by $1 million and the Bank of Canada's assets in the form of depository institution's reserves increase by $1 million.
B) the bank's assets increase by $1 million and the Bank of Canada's liabilities increase by $1 million.
C) the bank's assets increase by $1 million but there is no change at the Bank of Canada.
D) the net effect on the Bank of Canada and the bank is zero because assets always equal liabilities.
Correct Answer:
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