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Central Bank policy requires Northern Bank to hold 10% of its deposits as reserves. Northern Bank policy prevents it from holding excess reserves. If the central bank purchases $30 million in bonds from Northern Bank what will be the result? O Northern's bond assets increase by $30 million O Northern's loan assets increase by $30 million O the money supply in the economy decreases O Northern's net worth changes by $30 million

Central Bank policy requires Northern Bank to hold 10% of its deposits as reserves. Northern Bank policy prevents it from holding excess reserves. If the central bank purchases $30 million in bonds from Northern Bank what will be the result? O Northern's bond assets increase by $30 million O Northern's loan assets increase by $30 million O the money supply in the economy decreases O Northern's net worth changes by $30 million

Database System Concepts
Database System Concepts
7th Edition
ISBN:9780078022159
Author:Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan
Publisher:Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan
Chapter1: Introduction
Section: Chapter Questions
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Central Bank policy requires Northern Bank to hold 10% of its deposits as reserves. Northern Bank policy prevents it from holding excess reserves. If the central bank purchases $30 million in bonds from Northern Bank what will be the result? O Northern's bond assets increase by $30 million Northern's loan assets increase by $30 million O the money supply in the economy decreases O Northern's net worth changes by $30 million
Transcribed Image Text:Central Bank policy requires Northern Bank to hold 10% of its deposits as reserves. Northern Bank policy prevents it from holding excess reserves. If the central bank purchases $30 million in bonds from Northern Bank what will be the result? O Northern's bond assets increase by $30 million Northern's loan assets increase by $30 million O the money supply in the economy decreases O Northern's net worth changes by $30 million
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