The desired reserve ratio is 10%,and originally there are no excess reserves in any bank.If the Bank of Canada buys $1 million of Canadian government securities from a bond dealer,and the dealer deposits the Bank of Canada's cheque in her bank,then
A) the bank can make additional loans up to $1 million.
B) the bank can make additional loans up to $900,000.
C) the bank can make additional loans up to $90,000.
D) the bank has to call in loans of at least $1 million.
Correct Answer:
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A)the Bank of
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A)varies inversely with
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