1. When the Bank of Canada sells a government bond to a bank, reserves in the banking system ________ and the monetary base ________, everything else held constant.

Increase; increases

Increase; decreases

decrease; increases

decrease; decreases

2 When the Bank of Canada purchases a government bond from a bank, reserves in the banking system ________ and the monetary base ________, everything else held constant.

decrease; decreases

increase; decreases

decrease; increases

increase; increases