If the Bank of Canada Enters the Open Market and Sells

question 44

Multiple Choice

If the Bank of Canada enters the open market and sells $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 and a 10% cash drain?

• A)decrease of $1000
• B)decrease of $5000
• C)decrease of $10 000
• D)increase of $5000
• E)increase of $10 000

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Definitions:

Unemployment Benefits

Payments made by the government or other authorized bodies to unemployed individuals who meet certain eligibility criteria.

Wealthy Minority

A small segment of the population that holds a disproportionately large share of the total wealth and economic resources of a society.

Governement Invests

The process by which the government spends on capital projects or injects funds into the economy, aiming to promote economic growth.

Labor Productivity

A measure of economic output per unit of labor input, often assessed as output per hour worked.