When the Bank of Canada Decreases the Interest Rate Paid

question 33

Multiple Choice

When the Bank of Canada decreases the interest rate paid on reserves, it:

• A)increases the reserve-deposit ratio (rr).
• B)decreases the reserve-deposit ratio (rr).
• C)increases the monetary base (B).
• D)decreases the monetary base (B).

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Definitions:

Cost Ratios

The relationship between two elements of cost, showing how one cost compares to another, often used for analysis or efficiency assessment.

Production Possibilities Curves

A graphical representation showing the maximum number of goods or services that can be produced with limited resources.

Specialize

The process by which individuals or entities focus on producing a limited range of goods or services to gain greater efficiency and productivity.

Export

The sale of goods or services from one country to another.