Question

Which of the following explains why the government sets a required reserve

ratio for private banks?
O
A. To enable the regulation of risk levels in the decision process of
offering loans.
B. To make sure banks don't run out of money when customers make
withdrawals.
O
C. To prevent banks from printing too much money and causing
inflation.
O
D. To allow the government to control the interest rate charged on
loans.

Answer 1

Answer: to make sure banks don’t run out of money when customers make withdrawals

Step-by-step explanation:

Answer 2

The correct answer is (B)

Step-by-step explanation:

Reserve ratio is set by the government and state bank to avoid bankruptcy. Reserve ratio is a percentage of total deposits that the bank saves for their customers. Likewise, in case of an emergency, the banks can use that money to pay the liabilities. The basic purpose is to make sure that banks can offer money to their customers when they wish to withdraw