Assume That the Reserve-Deposit Ratio Is 0

question 85

Multiple Choice

Assume that the reserve-deposit ratio is 0.2.The Bank of Canada carries out open-market operations,purchasing $1,000,000 worth of bonds from banks.This action increased the money supply by $2,600,000.What is the currency-deposit ratio?

• A)0.2
• B)0.3
• C)0.4
• D)0.5