the economics of money, banking, and financial markets

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9. 
   

   When the Bank of Canada sells a government bond to 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: D
   Diff: 1 Type: MC Page Ref: 380
   Skill: Recall
   Objective List: 16.2 Discern who controls the monetary base and what causes it to change

   
   


10. 
    

    When a bank sells a government bond to the Bank of Canada, 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: 380
    Skill: Recall
    Objective List: 16.2 Discern who controls the monetary base and what causes it to change

    
    


11. 
    

    When a bank buys a government bond from the Bank of Canada, 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: D
    Diff: 1 Type: MC Page Ref: 380
    Skill: Recall
    Objective List: 16.2 Discern who controls the monetary base and what causes it to change

    
    


12. 
    

    The monetary base declines when ____.
    A) the Bank extends advances to banks
    B) deposits at the Bank decrease
    C) float increases
    D) the Bank sells securities
    Answer: D
    Diff: 1 Type: MC Page Ref: 380
    Skill: Recall
    Objective List: 16.2 Discern who controls the monetary base and what causes it to change