With the fractional banking system in Canada,a commercial bank with $1,000 of deposits generally would

Question

Quizplus · Accepted Answer

In Canada, commercial banks are required to maintain a minimum reserve ratio of 0.05, which means they must hold at least 5 cents of every dollar deposited as cash reserves. So, a bank with $1,000 of deposits would be required to maintain at least $50 in cash reserves, but they may choose to hold more to ensure they can meet the demand for withdrawals. Therefore, the most appropriate answer is C, which states that the bank would maintain less than $1,000 but more than $0 in cash reserves.

With the Fractional Banking System in Canada,a Commercial Bank with $1,000