Which of the Following Statements Is Not Correct

question 36

Multiple Choice

Which of the following statements is not correct?

• A)The money supply increases when the Bank of Canada buys bonds from households or businesses.
• B)Excess reserves are the amount by which actual reserves exceed desired reserves.
• C)Chartered banks increase the money supply when they lend to households or businesses.
• D)Bank reserves are an asset to banks but a liability to the Bank of Canada.
• E)The money supply decreases when the Bank of Canada buys bonds from households or businesses.

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Definitions:

Indifference Curve

A graph that shows different combinations of two goods among which a consumer is indifferent, implying the same level of utility for each combination.

Hicks Version

Refers to John Hicks' adaptation of consumer demand theory, particularly in relation to indifference curves and utility maximization.

Substitution Effect

A modification in buying behavior triggered by a change in goods' comparative prices, prompting people to switch from one product to another.

Indifference Curve

A graph representing combinations of goods that provide the same level of satisfaction to a consumer.