If the Bank of Canada Increases the Monetary Base by $5

question 36

Multiple Choice

If the Bank of Canada increases the monetary base by $5 million and the money multiplier is 5,M1 will

• A)rise by $25 million.
• B)fall by $25 million.
• C)rise by $1 million.
• D)fall by $1 million.

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Definitions:

Cash Flows

The net amount of cash being transferred into and out of a business, indicating its liquidity level over a period.

Financing Activities

These are activities that result in changes in the size and composition of the equity capital or borrowings of the entity.

Schedule

A plan that lists events, activities, or tasks along with their intended or expected times and dates.

Investing Activities

Part of a company's cash flow statement that shows the amount of money spent or generated from various investment-related activities in a specific time period.