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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
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
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
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