Assume that the desired reserve ratio is 20 percent.Suppose that the Bank of Canada sells $500 of government securities to chartered banks and buys $500 of securities from individuals,who deposit the cash in chequing accounts.
-Refer to the above information.As a result of these transactions,reserves in the banking system will:

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The Bank of Canada sells $500 of securities to banks, reducing their reserves by $500. It buys $500 of securities from individuals, who deposit the money, increasing reserves by $500. The net effect is no change in reserves.

Assume That the Desired Reserve Ratio Is 20 Percent