If There Are Zero Excess Reserves in the Canadian Banking

question 96

Multiple Choice

If there are zero excess reserves in the Canadian banking system and the Bank of Canada raises the required reserve ratio from 10 percent to 20 percent,then

• A)the money supply will double.
• B)the money supply will be unaffected.
• C)required reserves double and the money supply must decrease by this amount times 5.
• D)required reserves double and the money supply must decrease by this amount times 10.

---

Definitions:

Significance

A measure of how likely it is that an obtained result could have occurred by chance.

Independent Variables

Variables in an experiment or model that are manipulated or controlled to test their effects on dependent variables.

Multiple Regression Model

A statistical technique that uses several explanatory variables to predict the outcome of a response variable.

Error Term

The error term represents the difference between observed values and the values predicted by a model in statistical analysis.