Solved

The Desired Reserve Ratio Is 10 Percent,Bank a Has $1

Question 29

Multiple Choice

The desired reserve ratio is 10 percent,Bank A has $1 million in excess reserves,and all other banks have zero excess reserves.If the Bank of Canada buys $1 million of government securities and the cheque is deposited in Bank A,but Bank A refuses to grant any loans or buy any financial securities,then


A) the money supply does not increase.
B) the money supply increases by $900,000.
C) the money supply increases by $1 million.
D) the money supply increases by more than $1 million.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents