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If the Bank of Canada Enters the Open Market and Purchases

question 5

Multiple Choice

If the Bank of Canada enters the open market and purchases $1000 of government securities,what will be the eventual change in the money supply given a 10% target reserve ratio in the commercial banking system?

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Definitions:

Owner in Common

A form of property ownership in which two or more individuals share ownership rights in a property without specific divisions among them.

Fungible Goods

Goods that are alike by physical nature, by agreement, or by trade usage. Examples are wheat, oil, and wine that are identical in type and quality.

Title

Legal ownership of property, including the rights to use, sell, or transfer the property.

Title

Legal ownership rights to property, signifying that the owner has the legal right to use, control, and dispose of the property.

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