A. It gives traditional banks more revenue. B. It controls government spending. C. It gives traditional banks more power. D. It protects public deposits.
D is the answer. Not A. First you look at WHO controls the reserve requirement. Govt. Central Bank. Option A cannot be the answer as it is not an objective of the govt. Govt looks at social welfare of its citizens. The public deposits is the money the govt owns (not the consumers' money, pls do not misinterpret.) By ensuring proper accountability of the reserve req, the interest rate and hence value of the public 's money is ensured. Hence, it allows the govt to retain or even inc the value of public deposits to being about public welfare when it is spent (on infrastructure healthcare, etc.)
