In the Simple Deposit Expansion Model, If the Bank of Canada

question 104

Multiple Choice

In the simple deposit expansion model, if the Bank of Canada purchases $100 worth of bonds from a bank that previously had no excess reserves, deposits in the banking system can potentially increase by ________.

• A) $10
• B) $100
• C) $100 times the reciprocal of the desired reserve ratio
• D) $100 times the desired reserve ratio

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Definitions:

Underground Economy

consists of unreported income from the production of legal goods and services, either due to tax avoidance or the desire to avoid government regulations.

Gross Domestic Product

The total valuation in terms of money or market prices of all goods and services completed within a country’s borders within a specified time period.

Gross Domestic Product

Often abbreviated as GDP, Gross Domestic Product measures the total economic output of a country, including the monetary value of all goods and services produced within its borders in a specific timeframe.

Gross Domestic Product

The entire monetary or market valuation of all last-stage goods and services produced inside the borders of a country over a given time period.