What happens when a bank is required to hold more money in reserve?
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.
Answer (1)
Increasing reserve requirements means that banks have less money available for loans, operations, and potentially even for interest payments. This constraint can impact the overall credit supply in the economy. As a result, banks may face challenges in meeting customer demands and funding opportunities. ;
