When the Bank of Canada Sells $100 Worth of Bonds

question 67

Multiple Choice

When the Bank of Canada sells $100 worth of bonds to First National Bank, reserves in the banking system ________.

• A) increase by $100
• B) increase by more than $100
• C) decrease by $100
• D) decrease by more than $100

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Definitions:

Expense Function

A mathematical representation or formula used to calculate the total expenses incurred by a business or individual.

Demand Function

A mathematical formula representing the relationship between the quantity demanded of a good and its affecting factors such as price, income, and preferences.

Revenue

The income a business receives from selling a product.

Wholesale Price

The price that manufacturers charge the retailer.