Consider the Following Situation in the Canadian Banking System

question 77

Multiple Choice

Consider the following situation in the Canadian banking system:
∙ An investment dealer withdraws $10 million from its account at Bank XYZ to
purchase government securities from the Bank of Canada.
∙ As a result,$10 million has been withdrawn from the Canadian banking system.
∙ The target reserve ratio for all banks is 10%.
∙ All commercial banks operate with no excess reserves.
∙ There is no cash drain.
TABLE 26-5
-Refer to Table 26-5.Assume that Bank XYZ has decreased its loans and re-established its target reserve ratio.The second-generation banks in this scenario will

• A)decrease their loans by $9.0 million.
• B)decrease their loans by $8.1 million.
• C)not have to change their loan positions.
• D)increase their loans by $8.1 million.
• E)increase their loans by $9.0 million.

---

Definitions:

Multiple Regression

A statistical approach that determines how a dependent variable's behavior is related to the influence of multiple independent variables.

Best Model

The most suitable statistical or computational model that provides the best fit to the data according to selected criteria.

Anova F Test

A statistical method used to compare three or more samples by analyzing the variance among them to determine if they come from the same population.

Regression Coefficients

Quantitative expressions that represent the strength and direction of the relationship between independent variables and the dependent variable in a regression analysis.