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Everything else held constant, a decrease in the desired reserve ratio will mean ____.
A) a decrease in the money supply
B) an increase in the money supply
C) a decrease in chequable deposits
D) an increase in advances to banks
Answer: B
Diff: 1 Type: MC Page Ref: 390
Skill: Recall
Objective List: 16.2 Discern who controls the monetary base and what causes it to change
Everything else held constant, an increase in currency holdings will cause ____.
A) the money supply to rise
B) the money supply to remain constant
C) the money supply to fall
D) chequable deposits to rise
Answer: C
Diff: 1 Type: MC Page Ref: 390
Skill: Recall
Objective List: 16.2 Discern who controls the monetary base and what causes it to change
1 6.6 Overview of the Money Supply Process
In the model of the money supply process, the Bank of Canada's role in influencing the money
supply is represented by ____.
A) both desired reserves and currency holdings
B) nonborrowed reserves and borrowed reserves
C) only borrowed reserves
D) only nonborrowed reserves
Answer: B
Diff: 2 Type: MC Page Ref: 391
Skill: Recall
Objective List: 16.2 Discern who controls the monetary base and what causes it to change
In the model of the money supply process, the depositor's role in influencing the money
supply is represented by ____.
A) only the currency holdings
B) both the currency holdings and desired reserves
C) the currency holdings, desired reserves, and borrowed reserves
D) only desired reserves
Answer: B
Diff: 2 Type: MC Page Ref: 391
Skill: Recall
Objective List: 16.2 Discern who controls the monetary base and what causes it to change