The required ratio is 10 percent of their deposits as reserves.Currently,there are $200 billion in deposits.The Bank of Canada raises the reserve requirement to 20 percent.Consequently,

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Initially, with a 10% reserve requirement on $200 billion in deposits, banks need to hold $20 billion in reserves. When the requirement is raised to 20%, they need to hold $40 billion in reserves, effectively reducing the amount available for lending by $20 billion. The money supply decreases because banks can lend less, but the direct decrease is not by the full amount of deposits or a multiple thereof. The specific impact on the money supply depends on the banking system's ability to create money through lending, typically assessed through the money multiplier effect, but the immediate direct effect is not as large as options C or D suggest, and there is a change, contrary to option A.

The Required Ratio Is 10 Percent of Their Deposits as Reserves.Currently,there