Requiring commercial banks to hold reserves equal to some fraction of their deposit liabilities
A) acts as a constraint on bank lending.
B) is an alternative for banks that choose not to use the gold standard.
C) is without significance since banks are not required to meet their liabilities on demand by depositors.
D) prevents runs on banks by depositors who fear that the banks may not have assets equal to their liabilities.
E) really has no effect on the monetary system today.
A
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