Final answer:
The question is about the regulations that govern transaction limits within deposit accounts. Such regulations are intended to maintain the solvency and risk management practices of banks, involving reserve requirements and investment restrictions.
Step-by-step explanation:
The question pertains to the regulation of transaction limits within deposit accounts, which is a crucial aspect of bank regulation. In the realm of Money and Banking, transaction limits are part of ensuring the solvency and risk management of depository institutions. Banks are mandated to adhere to reserve requirements, which is the minimum percentage of deposits they must hold as reserves. These reserves, held both in the bank and at the Federal Reserve, are in place partly to cover depositor withdrawals.
Furthermore, banks face restrictions on the types of investments they can make to prevent excessive risk exposure. They are allowed to make loans and purchase U.S. Treasury securities but are barred from investing in the stock market or similar risky assets. These regulations serve multiple objectives, including the prevention of bank runs, ensuring banks have enough capital to cover deposits, and aligning with monetary policy.