The Following Are Simplified Consolidated Balance Sheets for the Chartered

question 193

Multiple Choice

The following are simplified consolidated balance sheets for the chartered banking system and the Bank of Canada.Do not cumulate your answers;that is,do return to the data given in the original balance sheets in answering each question.Assume a desired reserve ratio of 5 percent for the chartered banks.All figures are in billions of dollars.
CONSOLIDATED BALANCE SHEET: CHARTERED BANKING SYSTEM
BALANCE SHEET: BANK OF CANADA

-Refer to the above information.Suppose the Bank of Canada buys $2 in securities from the public.As a result of this transaction,the supply of money will:

• A) directly increase by $2 and the money-creating potential of the chartered banking system will increase by $38.
• B) directly increase by $40 and the money-creating potential of the chartered banking system will increase by $800.
• C) directly increase by $2 and the money-creating potential of the chartered banking system will be unaffected.
• D) be unaffected but the money-creating potential of the chartered banking system will increase by $40.

---

Definitions:

Examples

Specific instances or cases used to illustrate a point, clarify a concept, or provide evidence in support of an argument or discussion.

Theories Of Dreams

Various psychological interpretations of dreams, ranging from Freud's view of them as wish fulfillment to more modern theories suggesting they assist in memory formation, problem-solving, and emotional regulation.

Compare And Contrast

To identify the similarities and differences between two or more subjects.

Absolute Threshold

The minimum amount of sensory stimulation that can be detected 50% of the time.