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Department
Economics
Course
ECO100Y1
Professor
W.G.Wolfson
Semester
Winter

Description
ECO100Y1d.doc Lecture #22 Monday, March 29, 2004 A DVANCES FROM T HE BANK OF CANADA Suppose the reserve rates at the chartered banks fall below the desired ratio. They borrow funds from the Bank of Canada: Chartered Banks Bank of Canada Reserves: +100 (DD at Advances from Bank of Advances to Chartered DD: +100 (Chartered Bank of Canada) Canada: +100 Banks: +100 Banks) No direct increase in the money supply rare case, usually repaid quickly. Bank Rate: Interest rate charged by the Bank of Canada for advances. Reflects the short-term interest rates influences the interest rates. Can either encouragediscourage banks to keep reserves indirectly expand or contract money supply. FOREIGN E XCHANGE M ARKET Canadian Dollars Foreign Exchange Import : Supply
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