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-(Table: Assets and Liabilities of the Banking System)Refer to Table: Assets and Liabilities of the Banking System.Suppose that the reserve ratio is 10% and the Bank of Canada buys $11 000 worth of Canadian Treasury bills from the banking system.If the banking system does NOT want to hold any excess reserves,_____ will be added to the money supply.

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Use the following to answer questions: 
-(Table: Assets and Liabilities of the Banking System)Refer to Table: Assets and Liabilities of the Banking System.Suppose that the reserve ratio is 10% and the Bank of Canada buys $11 000 worth of Canadian Treasury bills from the banking system.If the banking system does NOT want to hold any excess reserves,_____ will be added to the money supply.

Quizplus · Accepted Answer

The money multiplier is 1/reserve ratio = 1/0.10 = 10. Therefore, the increase in the money supply is $11,000 * 10 = $110,000.

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