If Chartered Banks Are Increasing Their Borrowing from the Bank

question 62

Multiple Choice

If chartered banks are increasing their borrowing from the Bank of Canada while the Bank of Canada is selling government securities,what impact will the borrowing of the chartered banks from the Bank of Canada tend to have?

• A)It will tend to reinforce the contractionary open market operations policy.
• B)It will tend to reinforce the expansionary open market operations policy.
• C)It will tend to counteract the expansionary open market operations policy.
• D)It will tend to counteract the contractionary open market operations policy.

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Definitions:

Share Capital

The total amount of funds raised by a company through the issuance of shares to shareholders, representing ownership in the company.

Retained Earnings

The portion of a company's profit that is kept or retained within the company, not distributed to shareholders as dividends.

Market Value

The present cost at which a service or asset is available for purchase or sale in the market.

Stock Dividend

A dividend payment made in the form of additional shares rather than cash, increasing the total number of shares owned by shareholders.