Final answer:
A reserve account, which includes funds that banks do not lend out or invest, primarily benefits banking institutions by providing a safeguard against unexpected financial demands and complying with minimum reserve requirements imposed by the Federal Reserve.
Step-by-step explanation:
An impound or reserve account primarily benefits the d) Banking institution.
These accounts consist of funds that banks keep on hand and do not lend out or invest, which means these funds do not generate interest income.
This serves as a safeguard to ensure banks have sufficient funds to meet withdrawal requests and other financial obligations.
The Federal Reserve requires banks to maintain a minimum reserve requirement as a monetary policy tool to influence bank behavior.
Moreover, banks may also hold extra reserves beyond the minimum to prepare for uncertainties or withdrawal demands.