Suppose the Bank of Canada advances a $50,000,000 loan to Bank 1, and Bank 1 and all other banks have no excess reserves prior to this loan. a. What type of policy is this? OA. Contractionary monetary policy OB. Contractionary fiscal policy OC. Expansionary monetary policy OD. Expansionary fiscal policy OE. None of the above b. What asset of the Bank of Canada changes? (Enter your response as a whole number. Do not include the $ symbol in your answer) increase(s) by $ 50000000 c. What liability of the Bank of Canada changes? (Enter your response as a whole number. Do not include the $ symbol in your answer) increase(s) by S

Suppose the Bank of Canada advances a $50,000,000 loan to Bank 1, and Bank 1 and all other banks have no excess reserves prior to this loan. a. What type of policy is this? OA. Contractionary monetary policy OB. Contractionary fiscal policy OC. Expansionary monetary policy OD. Expansionary fiscal policy OE. None of the above b. What asset of the Bank of Canada changes? (Enter your response as a whole number. Do not include the $ symbol in your answer) increase(s) by $ 50000000 c. What liability of the Bank of Canada changes? (Enter your response as a whole number. Do not include the $ symbol in your answer) increase(s) by S

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose the Bank of Canada advances a $50,000,000 loan to Bank 1, and Bank 1 and all other banks have no excess reserves prior to this loan.
a. What type of policy is this?
OA. Contractionary monetary policy
OB. Contractionary fiscal policy
OC. Expansionary monetary policy
OD. Expansionary fiscal policy
OE. None of the above
b. What asset of the Bank of Canada changes? (Enter your response s a whole number. Do not include the $ symbol in your answer)
increase(s) by $ 50000000
c. What liability of the Bank of Canada changes? (Enter your response as a whole number Do not include the $ symbol in your answer)
▼ increase(s) by $
d. What asset of Bank 1 changes? (Enter your response as a whole number. Do not include the $ symbol in your answer)
increase(s) by S
e. What liability of Bank 1 changes? (Enter your response as a whole number. Do not include the $ symbol in your answer)
increase(s) by $
Loans
f. If the desired reserve ratio for Bank 1 and all other banks is 5 percent, then the maximum new loan Bank 1 can give is $ 50000000 (Enter your response as a whole number. Do not include the $ sym
your answer.)
4
g. What asset and liability of Bank 1 will change because of this new loan? (Enter your responses as whole numbers. Do not include the $ symbol in your answers.)
The asset that will change is reserves
which will increase by $ The liability that will change is loans
which will increase by $

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