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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
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
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
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