Use the Following to Answer Questions

question 207

Multiple Choice

Use the following to answer questions:
-If the Bank of Canada buys $250 million worth of Canadian Treasury bills in the open market and the reserve ratio is 10%,then the money supply will:

• A) have the potential to increase by $2 500 million.
• B) remain unchanged.
• C) increase by only $250 million.
• D) increase by only $25 million.

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Definitions:

Operating Expenses

The costs associated with the normal operations of a business, such as rent, utilities, and payroll, excluding cost of goods sold.

Dividends

Payments made by a corporation to its shareholder members, usually as a distribution of profits.

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to reflect cash transactions.

Comparative Balance Sheets

Financial statements that present the assets, liabilities, and shareholders' equity of a company at different points in time for comparison.