If the Bank of Canada lends five banks an additional total of $100 million but depositors withdraw
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If the Bank of Canada lends five banks an additional total of $100 million but depositors withdraw $50 million and hold it as currency, what happens to reserves and the monetary base? Use T-accounts to explain your answer.
The desired reserve ratio on chequable deposits is 10%, banks do not hold any excess reserves, and the public’s holdings of currency do not change.
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The initial effect of the loans on the banking system Bank of Canada and public are shown ...View the full answer
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Related Book For 
The Economics of Money Banking and Financial Markets
ISBN: 978-0321785701
5th Canadian edition
Authors: Frederic S. Mishkin, Apostolos Serletis
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