Answer to Question #67073 in Other Economics for Jan
(b ) If the BOC has a policy goal of keeping the level of settlement balance constant, what action will the BOC undertake to deal with the currency withdrawl? Using another set of T-accounts show the changes to the BOC’s balance sheet and the balance sheet of the Canadian commercial banks of this BOC action.
(c ) How has the Government of Canada benefitted financially as a result of the combined actions of the commercial banks and the BOC in part (a) and (b)? Briefly describe
(b) If the BOC has a policy goal of keeping the level of settlement balance constant, than the BOC should increase the interest rate or increase the money supply by $25 million to deal with the currency withdrawal.
(c) The Government of Canada will not lose its reserves and the commercial banks will have more money for operations as a result of the combined actions of the commercial banks and the BOC.
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