The reserves of a bank include
A)the cash in its vault plus any deposits held on account with the Bank of Canada plus the value of any government bonds that it holds.
B)the cash in its vault plus the value of its chequable deposits.
C)the cash in its vault plus any deposits held on account at the Bank of Canada.
D)the cash in its vault plus any gold held for the bank at the Bank of Canada.
E)all of its common stock holdings, the cash in its vault, and all deposits held on account with the Bank of Canada.

Question

Quizplus · Accepted Answer

Reserves of a bank consist of the cash it holds in its vault and any deposits that it may have at the central bank, which in Canada is the Bank of Canada. Therefore, option C is the correct choice. Option A is incorrect because government bonds are not considered to be part of the reserves. Option B is incorrect because chequable deposits are liabilities of the bank and not counted as reserves. Option D is incorrect because gold holdings are not generally considered as part of a bank's reserves. Option E is incorrect because common stock holdings are not included as part of a bank's reserves.

The Reserves of a Bank Include