The correct answer is D. The bank reserves part of the money and uses the rest to make loans to other people who need them.
When a person deposits money into a bank account, the bank is required to keep a certain percentage of that money in reserve, which is determined by the Federal Reserve. This reserve requirement helps ensure that banks have enough money on hand to meet the demands of their customers.
The rest of the deposited money is used by the bank to make loans to other people or businesses who need them. This is how banks earn money - by charging interest on the loans they make.
The bank may also invest some of the deposited money in other financial instruments, such as stocks or bonds, in order to earn additional income.
Overall, the bank uses the deposited money to generate income and provide loans to those in need, while also maintaining a certain level of reserves to ensure stability and liquidity.