The demand for reserves depends on income and the price level. True or false?

The correct answer is true.

Explanation:

The demand for reserves is influenced by various factors and income and price level are among them. If the income raises then the demand rises which leads to rise in price level and this creates the situation of inflation in the economy. This situation forces to increase the level of reserves in order to control inflation. Therefore, reserve requirement changes with change in income and price level.