Multiple choice question

Suppose a person payback his credit card debt right after the deposit of his payroll cheque and cashes the rest of his pay. Everything else held constant, total reserves in the banking system ________ and the monetary base _________.

1. decrease; remains unchanged

2. increased; remains unchanged

3. decreased; increased

4. decrease; decreased

If a member of the nonbank public sells a government bond to the Bank of Canada in exchange for currency, the monetary base will __________, and reserves will ___________.

1. rise; fall

2. remain unchanged; rise

3. fall; rise

4. rise; remain unchanged

LVTS (large value transfer system) participants with positive settlement balances at the end of the day _________.

1. are paid the policy rate

2. are paid the overnight rate

3. are paid the bank rate

4. are paid the deposit rate