If the Bank of Canada reduces reserves by selling $5 million worth of bonds to the banks,

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If the Bank of Canada reduces reserves by selling $5 million worth of bonds to the banks, what will the T-account of the banking system look like when the banking system is in equilibrium? What will have happened to the level of chequable deposits?

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 Economics of Money Banking and Financial Markets

ISBN: 978-0321785701

5th Canadian edition

Authors: Frederic S. Mishkin, Apostolos Serletis

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Question Posted: Nov 09, 2018 12:17 PM

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If the Bank of Canada reduces reserves by selling $5 million worth of bonds to the banks,

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Chequable deposits will decrease by 50 million when the banking ...View the full answer

The Economics of Money Banking and Financial Markets

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