Assume That the Desired Reserve Ratio for the Chartered Banks

question 36

Multiple Choice

Assume that the desired reserve ratio for the chartered banks is 25 percent.If Bank of Canada buys $3 billion in government securities from chartered banks we can say that, as a result of this transaction, the lending ability of the chartered banking system will:

• A)decrease by $9 billion.
• B)increase by $9 billion.
• C)increase by $15 billion.
• D)increase by $12 billion.

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Definitions:

Polls

Surveys of public opinion from a particular sample, used to predict the outcome of elections or gather information on attitudes towards a topic.

Representative Sample

A sample that is similar to the larger population from which it was drawn.

Modus Ponens

A hypothetical syllogism in which the antecedent premise is affirmed by the consequent premise.

Inductive Argument

A type of reasoning that constructs or evaluates propositions that are abstractions of observations of individual instances.