the economics of money, banking, and financial markets

463 $

© 2014 Pearson Canada Inc.$

5. 
   

   Purchases and sales of government securities by the Bank of Canada are called ____.
   A) advances to banks
   B) Bank fund transfers
   C) open market operations
   D) swap transactions
   Answer: C
   Diff: 1 Type: MC Page Ref: 378
   Skill: Recall
   Objective List: 16.2 Discern who controls the monetary base and what causes it to change

   
   


6. 
   

   When the Bank of Canada purchases a government bond from a bank, reserves in the banking
   system ____ and the monetary base ____, everything else held constant.
   A) increase; increases
   B) increase; decreases
   C) decrease; increases
   D) decrease; decreases
   Answer: A
   Diff: 1 Type: MC Page Ref: 378
   Skill: Recall
   Objective List: 16.2 Discern who controls the monetary base and what causes it to change

   
   


7. 
   

   Suppose a person cashes his payroll cheque and holds all the funds in the form of currency.
   Everything else held constant, total reserves in the banking system ____ and the monetary
   base ____.
   A) remain unchanged; increases
   B) decrease; increases
   C) decrease; remains unchanged
   D) decrease; decreases
   Answer: C
   Diff: 2 Type: MC Page Ref: 378 - 379
   Skill: Recall
   Objective List: 16.2 Discern who controls the monetary base and what causes it to change

   
   


8. 
   

   Suppose your payroll cheque is directly deposited to your chequing account. Everything else
   held constant, total reserves in the banking system ____ and the monetary base ____.
   A) remain unchanged; remains unchanged
   B) remain unchanged; increases
   C) decrease; increases
   D) decrease; decreases
   Answer: A
   Diff: 1 Type: MC Page Ref: 378 - 379
   Skill: Recall
   Objective List: 16.2 Discern who controls the monetary base and what causes it to change