The primary reason commercial banks must keep required reserves on deposit at the Fed is to:

Question

Quizplus · Accepted Answer

The primary reason why commercial banks must keep required reserves on deposit at the Fed is to allow the Fed to control the amount of bank lending. By adjusting the reserve requirements, the Fed can either encourage or discourage commercial bank lending, which in turn can affect the money supply and influence the overall health of the economy. The other answer choices are not necessarily the primary reasons for required reserves.

The Primary Reason Commercial Banks Must Keep Required Reserves on Deposit