6) Which of the following is INCORRECT? A) The currency owned by chartered banks is NOT...

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Economics

6) Which of the following is INCORRECT?
A) The currency owned by chartered banks is NOT included in themoney supply.
B) When chartered banks retire outstanding loans, the supply ofmoney is increased.
C) The net export effect may partially counteract anexpansionary fiscal policy.
D) The central bank expands money supply by lowering target forovernight lending rate and/or buying securities
11. Which of the following is correct? When the Bank of Canadabuys bonds on the open market, the money supply:
A) contracts and chartered bank reserves increase.
B) expands and chartered bank reserves decrease.
C) contracts and chartered bank reserves decrease.
D) expands and chartered bank reserves increase.

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Question 6 A A chartered bank is just like any other commercial bank which accepts deposits and makes loans However a chartered bank has to take permission from government to do business in financial services industry Money supply refers to the total sum of money available to the public at any point of time As the currency owned by commercial banks is included in money supply as it is the currency held by the public with the banks in the form of demand deposits similarly the currency owned by Chartered banks IS ALSO INCLUDED in the money supply as the public can withdraw See Answer

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