Consider the Following Situation in the Canadian Banking System: •

question 63

Multiple Choice

Consider the following situation in the Canadian banking system: • An investment dealer withdraws $10 million from its account at Bank XYZ to
Purchase government securities from the Bank of Canada.
• As a result,$10 million has been withdrawn from the Canadian banking system.
• The target reserve ratio for all banks is 10%.
• All commercial banks operate with no excess reserves.
• There is no cash drain.
TABLE 26-5
Refer to Table 26-5.Bank XYZ is immediately in a position to

• A)decrease its loans by $100 million.
• B)decrease its loans by $10 million.
• C)decrease its loans by $9 million.
• D)increase loans by $9 million.
• E)increase loans by $10 million.

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