Which of the following statements is not correct?
A)The money supply increases when the Bank of Canada buys bonds from households or businesses.
B)Excess reserves are the amount by which actual reserves exceed desired reserves.
C)Chartered banks increase the money supply when they lend to households or businesses.
D)Bank reserves are an asset to banks but a liability to the Bank of Canada.
E)The money supply decreases when the Bank of Canada buys bonds from households or businesses.

Question

Quizplus · Accepted Answer

When the Bank of Canada buys bonds from households or businesses, it injects more money into the economy, which increases the money supply. Therefore, statement E is incorrect.

Which of the Following Statements Is Not Correct