Which of the following are key components of the banking system?

The correct answer includes commercial banks, investment banks, central banks, and credit unions as key components of the banking system because these institutions play essential roles in the financial system.

Commercial banks are pivotal as they provide services such as deposits and loans to the public, making them the most recognized and utilized part of the banking system. Investment banks facilitate capital raising for corporations and offer advisory services for mergers and acquisitions, which is crucial for the functioning of financial markets.

Central banks, like the Federal Reserve in the U.S., manage the nation's monetary policy, regulate financial institutions, and serve as a bank for commercial banks, thereby stabilizing the economy. Lastly, credit unions serve similar functions to commercial banks but operate on a not-for-profit basis and typically provide more personalized services to their members, contributing to the broader banking framework.

This comprehensive inclusion of various types of financial institutions highlights their interconnectedness and shared purpose in maintaining financial stability, facilitating financial transactions, and supporting economic growth.