Use the following to answer questions:
-Suppose that the money supply increases by $150 million after the Bank of Canada engages in an open-market purchase of $50 million.Then the reserve ratio is:

Question

Use the following to answer questions: 
-Suppose that the money supply increases by $150 million after the Bank of Canada engages in an open-market purchase of $50 million.Then the reserve ratio is:

Quizplus · Accepted Answer

The reserve ratio is the ratio of reserves to deposits. In this case, the increase in the money supply is $150 million, and the increase in reserves is $50 million. Therefore, the reserve ratio is $50 million/$150 million = 0.33.

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