2. One of the ways the Bank of Canada exercises control over the monetary base is through its purchases and sales of government securities in the open market, called open market operations. a) How will a Bank of Canada purchase of $100 of government bonds from banks affect the monetary base? Fill in the following T-accounts in arriving at your answer. Clearly mention what asset and/or liability item will be affected, the direction of the change ((+) or (-)) and the dollar amount of the change. Banking System Liabilities Assets The Bank of Canada Liabi ies Assets Change in monetary base = b) How will a Bank of Canada sale of $100 of government bonds to the nonbank public affect the monetary base if the nonblank public pays for the bonds with currency? Fill in the following T-accounts in arriving at your answer. Follow the instructions provided in part a). Nonbank Public Assets Liabilities The Bank of Canada Liabilities Assets Change in monetary base c) How will a Bank of Canada purchase of $100 of government bonds from the nonblank public affect the monetary base if the Bank pays for the bonds with Bank's cheques? Fill in the following T-accounts in arriving at your answer. Follow the instructions provided in part a). Nonbank Public Assets Liabilities Banking System Liabilities Assets The Bank of Canada Liabilities Assets Change in monetary base 2. One of the ways the Bank of Canada exercises control over the monetary base is through its purchases and sales of government securities in the open market, called open market operations. a) How will a Bank of Canada purchase of $100 of government bonds from banks affect the monetary base? Fill in the following T-accounts in arriving at your answer. Clearly mention what asset and/or liability item will be affected, the direction of the change ((+) or (-)) and the dollar amount of the change. Banking System Liabilities Assets The Bank of Canada Liabi ies Assets Change in monetary base = b) How will a Bank of Canada sale of $100 of government bonds to the nonbank public affect the monetary base if the nonblank public pays for the bonds with currency? Fill in the following T-accounts in arriving at your answer. Follow the instructions provided in part a). Nonbank Public Assets Liabilities The Bank of Canada Liabilities Assets Change in monetary base c) How will a Bank of Canada purchase of $100 of government bonds from the nonblank public affect the monetary base if the Bank pays for the bonds with Bank's cheques? Fill in the following T-accounts in arriving at your answer. Follow the instructions provided in part a). Nonbank Public Assets Liabilities Banking System Liabilities Assets The Bank of Canada Liabilities Assets Change in monetary base