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

question 33

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, the bank can now increase its loans 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:

Credit Profile

A summary or analysis of an individual's or entity's credit history and current financial status used by lenders to gauge creditworthiness.

Trade Creditors

Suppliers or vendors that allow businesses to buy goods or services on account, paying them at a later date.

Flexible Lending Arrangements

Financial agreements that offer adaptable repayment terms to accommodate the borrower's financial situation.

Asset-Based Lending

A type of financing where loans are given based on the value of an individual's or company's assets.