BANKING SYSTEM (SBS) BANK OF CANADA (SBs) ASSETS ASSETS Reserves 32.0 60.0 Government Securities Advances to Chartered Banks Government Securities 50.0 42.0 Loans 120.0 LIABILITIES 160.0 LIABILITIES Chartered Bank Reserves Government Deposits Deposits Advances from BOC 32.0 42.0 70.0 Bank of Canada implements monetary policy and sells $20 billion of government securities directly from the banking system. Assume the reserve ratio is 20%. 1. Which of the following is a balance sheet Asset change for the Bank of Canada? OGovernment securities decrease by $20 billion. O Government securities increase by $20 billion O Advances to Chartered Banks increase by $20 billion. O Government deposits increase by $20 billion. O None. 2. Which of the following is a balance sheet Liability change for the Bank of Canada? O Government deposits decrease by $20 billion. O Chartered bank reserves increase by $20 billion. O Government deposits increase by $20 billion. Chartered bank reserves decrease by $20 billion. O Chartered bank reserves increase by $20 billion and government deposits decrease by $20 billion 3. What balance sheet Asset changes will occur for Chartered Banks (before multiplier process begins)? OReserves decrease by $20 billion O Reserves increase by $20 billion. O Government securities decrease by $20 billion. Government securities increase by $20 billion O Reserves decrease by $20 billion and government securities increase by $20 billion. 4. What balance sheet Liabilities changes will occur for the Chartered Banks (before the multiplier process begins)? O Government securities increase by $10 billion. Reserves increase by $10 billion. Deposits decrease by $10 billion. O Deposits increase by $10 billion. O None. 5. After the money multiplier process, what is the maximum amount of money the Chartered Banking system can reduce? O$20 Billion O$50 Billion O$100 Billion O$200 Billion 6. What two accounts on the consolidated balance sheet of the Chartered Banks will change as the result of the maximum amount of money reduced? OLoans and Advances from BOC Reserves and Advances from BOC Reserves and Deposits OLoans and Deposits