Question

How does it help the economy that banks offer incentives (like interest payments, deposit insurance, etc.) to get customers to deposit money with them?

Answer 1

C.) It helps prevent people from keeping their cash out of circulation

Answer 2

the answer is: it helps prevent people from keeping their cash out circulation

After collecting the money from the saver, Banks will provide loans to other business who needs a capital injection and put an interest rates from the total loan. This is the main way Banks obtain their profit.

This means that The more cash kept out of circulation , the more profit the Banks can potentially get.

Because of this, they offers various incentives for the saver to kept their money in the banks rather than using it somewhere else through interest, deposit insurance, maximum withdrawal, etc)