If a bank sells $4 million of bonds to the Bank of Canada to pay back $4 million on the loan it owes, what will be the effect on the level of chequable deposits in the banking system? Assume that every bank's desired reserve ratio is 4 percent, banks hold no excess reserves, and the public's holdings of currency do not change. (Select the correct choice below and, if necessary, fill in the answer box to complete your choice.) O A. Chequable deposits will increase by S OB. Chequable deposits will decrease by S OC. Chequable deposits will not change. million. (Round your response to two decimal places as needed. Enter a positive value. Do not include a plus sign in your response.) million. (Round your response to two decimal places as needed. Enter a positive value. Do not include a plus sign in your response.)

If a bank sells $4 million of bonds to the Bank of Canada to pay back $4 million on the loan it owes, what will be the effect on the level of chequable deposits in the banking system? Assume that every bank's desired reserve ratio is 4 percent, banks hold no excess reserves, and the public's holdings of currency do not change. (Select the correct choice below and, if necessary, fill in the answer box to complete your choice.) O A. Chequable deposits will increase by S OB. Chequable deposits will decrease by S OC. Chequable deposits will not change. million. (Round your response to two decimal places as needed. Enter a positive value. Do not include a plus sign in your response.) million. (Round your response to two decimal places as needed. Enter a positive value. Do not include a plus sign in your response.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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