Suppose the Reserve Ratio Is 10 Percent and Banks Do

question 25

Multiple Choice

Suppose the reserve ratio is 10 percent and banks do not hold excess reserves.Under these circumstances,suppose the Bank of Canada sells $60 million of bonds to the public.Which statement best describes the effects of this open-market operation?

• A) Bank reserves increase by $60 million,and the money supply eventually increases by $600 million.
• B) Bank reserves increase by $60 million,and the money supply eventually increases by $800 million.
• C) Bank reserves decrease by $60 million,and the money supply eventually decreases by $600 million.
• D) Bank reserves decrease by $60 million,and the money supply eventually decreases by $800 million.

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Definitions:

Separation Anxiety Disorder

A psychological condition in which an individual experiences excessive fear or anxiety about separation from those to whom they are attached.

Body Dysmorphic Disorder

A mental health disorder characterized by obsessive focus on a perceived flaw in appearance, often leading to significant distress or functional impairments.

Narcissistic Personality Disorder

A mental condition in which a person has an inflated sense of their own importance, a deep need for excessive attention and admiration, coupled with a lack of empathy for others.

Separation Anxiety Disorder

A mental health disorder characterized by an individual feeling overly anxious about being away from their home or from persons with whom they share a deep bond.