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2. [15 points in total] Suppose the Bank of Canada purchases a Government of Canada bond from Jiamjn for $8,000. a. What is the name
2. [15 points in total] Suppose the Bank of Canada purchases a Government of Canada bond from Jiamjn for $8,000. a. What is the name for the Bank of Canada's action? (1 point) b. Suppose Wdeposit the $8,000 in the First National Bank. Show this transaction on First National Bank's T-account. (2 points) First National Bank Assets Liabilities c. Suppose First National Bank decides to keep 10% of its deposits on reserve and to loan out the rest. Show this transaction on the T-account. (2 points) First National Bank Assets Liabilities (1. At this point, how much money has been created from the Bank of Canada's policy action? (2 points) e. What is the value of the money multiplier? (1 point) f. After innite rounds of depositing and lending, how much money could be created from the Bank of Canada's policy action? (2 points) g. If during the rounds of depositing and lending, some people keep some extra currency Bank of Canada's policy action than you found in part (f)? Why? (2 points) h. Suppose that people want to keep 30% currency and 70% deposits, how much money could be created from the Bank of Canada's policy action? (3 points)
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