the economics of money, banking, and financial markets

477 $

© 2014 Pearson Canada Inc.$

23. 
    

    In the simple deposit expansion model, a decline in chequable deposits of $1,000 when the
    desired reserve ratio is equal to 20 percent implies that the Bank of Canada ____.
    A) sold $200 in government bonds
    B) sold $500 in government bonds
    C) purchased $200 in government bonds
    D) purchased $500 in government bonds
    Answer: A
    Diff: 1 Type: MC Page Ref: 388
    Skill: Applied
    Objective List: 16.4 Utilize a simple model of multiple deposit creation, showing how the
    central bank can control the level of deposits by setting the level of reserves

    
    


24. 
    

    In the simple deposit expansion model, a decline in chequable deposits of $1,000 when the
    desired reserve ratio is equal to 10 percent implies that the Bank of Canada ____.
    A) sold $1,000 in government bonds
    B) sold $100 in government bonds
    C) purchased $1,000 in government bonds
    D) purchased $100 in government bonds
    Answer: B
    Diff: 1 Type: MC Page Ref: 388
    Skill: Applied
    Objective List: 16.4 Utilize a simple model of multiple deposit creation, showing how the
    central bank can control the level of deposits by setting the level of reserves

    
    


25. 
    

    In the simple deposit expansion model, a decline in chequable deposits of $500 when the
    desired reserve ratio is equal to 10 percent implies that the Bank of Canada ____.
    A) sold $500 in government bonds
    B) sold $50 in government bonds
    C) purchased $50 in government bonds
    D) purchased $500 in government bonds
    Answer: B
    Diff: 1 Type: MC Page Ref: 388
    Skill: Applied
    Objective List: 16.4 Utilize a simple model of multiple deposit creation, showing how the
    central bank can control the level of deposits by setting the level of reserves

    
    


26. 
    

    In the simple deposit expansion model, a decline in chequable deposits of $500 when the
    desired reserve ratio is equal to 20 percent implies that the Bank of Canada ____.
    A) sold $250 in government bonds
    B) sold $100 in government bonds
    C) sold $50 in government bonds
    D) purchased $100 in government bonds
    Answer: B
    Diff: 1 Type: MC Page Ref: 388
    Skill: Applied
    Objective List: 16.4 Utilize a simple model of multiple deposit creation, showing how the
    central bank can control the level of deposits by setting the level of reserves