Determine if the stataments are true or false and place them in the proper category.

True

False

Answer Bank

Reserve ratio $=$ required reserves$/$deposits

The reserve ratio determines the interest rate that customers receive for depositing money in a bank.

In Canada, the reserve ratio is set by provincial governments.

Excess reserves $=$ actual reserves $-$ required reserves

The primary reason why the Bank of Canada requires commercial banks to keep a specified amount of reserves is to decrease bank leverages.

Excess reserves are reserves held above what is required by the reserve ratio.