the economics of money, banking, and financial markets

468 $

© 2014 Pearson Canada Inc.$

25. 
    

    When the Bank extends a $100 loan to the First National Bank, reserves in the banking
    system ____.
    A) increase by $100
    B) increase by more than $100
    C) decrease by $100
    D) decrease by more than $100
    Answer: A
    Diff: 2 Type: MC Page Ref: 382
    Skill: Applied
    Objective List: 16.2 Discern who controls the monetary base and what causes it to change

    
    


26. 
    

    All else the same, when the Bank calls in a $100 loan previously extended to the First
    National Bank, reserves in the banking system ____.
    A) increase by $100
    B) increase by more than $100
    C) decrease by $100
    D) decrease by more than $100
    Answer: C
    Diff: 2 Type: MC Page Ref: 382
    Skill: Applied
    Objective List: 16.2 Discern who controls the monetary base and what causes it to change

    
    


27. 
    

    When the Bank of Canada extends a loan to a bank, the monetary base ____ and
    reserves ____.
    A) remains unchanged; decrease
    B) remains unchanged; increase
    C) increases; increase
    D) increases; remain unchanged
    Answer: C
    Diff: 1 Type: MC Page Ref: 382
    Skill: Recall
    Objective List: 16.2 Discern who controls the monetary base and what causes it to change

    
    


28. 
    

    When the Bank of Canada calls in a loan from a bank, the monetary base ____ and
    reserves ____.
    A) remains unchanged; decrease
    B) remains unchanged; increase
    C) decreases; decrease
    D) decreases; remains unchanged
    Answer: C
    Diff: 1 Type: MC Page Ref: 382
    Skill: Recall
    Objective List: 16.2 Discern who controls the monetary base and what causes it to change