In a Fractional Reserve Banking System,banks

question 4

Multiple Choice

In a fractional reserve banking system,banks

• A) are able to create money when excess reserves are lent to individuals who need to borrow money.
• B) can lend all of the deposits that are received.
• C) must purchase gold that equals the value of the deposits received.
• D) must deposit all cash from depositors with the Federal Reserve.
• E) have to deposit all cash from depositors in their own bank vault.