One reason why banks are required to deposit a minimum amount of reserves at the Federal Reserve is so that
A) banks will have more liquidity.
B) banks will be able to make more loans.
C) depositors will feel their deposits are protected.
D) the Federal Reserve can own a portion of all banks they regulate.
E) the Federal Reserve can control the ability of banks to lend money to others.

Question

Quizplus · Accepted Answer

The Federal Reserve requires banks to hold a minimum amount of reserves to control the money supply and influence the ability of banks to lend money, which is a key tool in monetary policy.

One Reason Why Banks Are Required to Deposit a Minimum