Assume that the desired reserve ratio for the chartered banks is 25 percent. If Bank of Canada buys $3 billion in government securities from chartered banks we can say that, as a result of this transaction, the lending ability of the chartered banking system will:
A) decrease by $9 billion.
B) increase by $9 billion.
C) increase by $15 billion.
D) increase by $12 billion. McConnell - Chapter 13 #98 The following are simplified consolidated balance sheets for the chartered banking system and the Bank of Canada. Do not cumulate your answers; that is, do return to the data given in the original balance sheets in answering each question. Assume a desired reserve ratio of 5 percent for the chartered banks. All figures are in billions of dollars. CONSOLIDATED BALANCE SHEET: CHARTERED BANKING SYSTEM BALANCE SHEET: BANK OF CANADA

Question

Assume that the desired reserve ratio for the chartered banks is 25 percent. If Bank of Canada buys $3 billion in government securities from chartered banks we can say that, as a result of this transaction, the lending ability of the chartered banking system will:
A) decrease by $9 billion. 
B) increase by $9 billion. 
C) increase by $15 billion. 
D) increase by $12 billion. McConnell - Chapter 13 #98 The following are simplified consolidated balance sheets for the chartered banking system and the Bank of Canada. Do not cumulate your answers; that is, do return to the data given in the original balance sheets in answering each question. Assume a desired reserve ratio of 5 percent for the chartered banks. All figures are in billions of dollars. CONSOLIDATED BALANCE SHEET: CHARTERED BANKING SYSTEM BALANCE SHEET: BANK OF CANADA

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The Answer of Assume that the desired reserve ratio for the chartered banks is 25 percent. If Bank of Canada buys $3 billion in government securities from chartered banks we can say that, as a result of this transaction, the lending ability of the chartered banking system will:
A) decrease by $9 billion. 
B) increase by $9 billion. 
C) increase by $15 billion. 
D) increase by $12 billion. McConnell - Chapter 13 #98 The following are simplified consolidated balance sheets for the chartered banking system and the Bank of Canada. Do not cumulate your answers; that is, do return to the data given in the original balance sheets in answering each question. Assume a desired reserve ratio of 5 percent for the chartered banks. All figures are in billions of dollars. CONSOLIDATED BALANCE SHEET: CHARTERED BANKING SYSTEM BALANCE SHEET: BANK OF CANADA

Assume That the Desired Reserve Ratio for the Chartered Banks