Core Functions of Commercial Banks

Steps:

• Recall that commercial banks operate in the private sector to serve individuals and businesses.
• Identify primary roles: they handle everyday financial transactions like saving and borrowing.
• Match choices to bank activities: accepting deposits is a basic service for customers.
• Eliminate options outside commercial banks' scope, such as central bank duties.

Why A is correct:

• Commercial banks accept deposits as a core function, defined as taking in customer funds for safekeeping and interest, per banking regulations like the Federal Reserve Act.

Why the others are wrong:

• B: Controlling money supply is the central bank's role, not commercial banks'.
• C: Issuing notes and coins is exclusively a central bank or government function.
• D: Lending primarily to the government is a central bank activity; commercial banks lend to the public.

Final answer: A