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Using the banking system's T-account, show what happens to chequable deposits in the banking system when the Bank of Canada lends an additional $1 million
Using the banking system's T-account, show what happens to chequable deposits in the banking system when the Bank of Canada lends an additional $1 million to the First National Bank. Assume that every bank's desired reserve ratio is 4 percent, banks hold no excess reserves, the public's holdings of currency do not change, and banks' holdings of securities do not change. (Select the correct choice below, and fill in the answer boxes to complete your choice. Type integers or decimals. Enter a negative value to indicate a decrease, and enter a positive value to indicate an increase. Do not include plus signs in your responses.) OA Liabilities Assets Loans (borrowings from the Bank of $ Canada) Loans m Reserves m m Chequable deposits $ m OB. Assets Reserves m Liabilities Loans (borrowings from the Bank of $ Canada) Loans m Chequable deposits $ m m OC. Assets Liabilities Loans (borrowings from the Bank of $ 1 m Canada) Reserves $ 1 m Chequable deposits $ m Loans m Oc. Assets Reserves $ 1 m Liabilities Loans (borrowings from the Bank of $1 Canada) Chequable deposits $0 m m Loans $ 3 m OD. Liabilities Assets Loans (borrowings from the Bank of $ Canada) Chequable deposits $ m Reserves $ m m m Loans m
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