10
QuizMultiple Choice

Unit 4 Test

Question 10 • (OC27) Economics-2102310-Sem-Meadows

What happens when a bank is required to hold more money in reserve?

Answer
A
It has less money for loans.
B
It has less money for operations.
C
It has less money for interest payments.
D
It has less money for withdrawals.

Explanation

Money held in reserve must stay available to meet depositors’ withdrawals and cannot be lent out. If a bank is required to keep more money in reserve, it therefore has less money available to make loans. The correct choice is “It has less money for loans.”

AI-written and checked against the verified answer.

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