Question: What is the purpose of a bank\'s reserve requirement?

Options:

1. To ensure banks have enough cash to meet customer withdrawals
2. To limit the amount of loans banks can issue
3. To control inflation rates
4. To increase the bank\'s profitability

Correct Answer: To ensure banks have enough cash to meet customer withdrawals

Solution:

The reserve requirement ensures that banks have enough cash on hand to meet customer withdrawals and maintain liquidity.