What Do We Mean in Our Current Banking System When

question 115

Multiple Choice

What do we mean in our current banking system when we say that a currency is "fractionally backed"?

• A)Banks have many more claims outstanding against them than they have reserves available to pay those claims.
• B)The currency is partially backed by the nation's supply of gold.
• C)A bank's currency is fractionally backed by its supply of gold.
• D)All paper currency is convertible to gold.
• E)Banks maintain a fixed fraction of their outstanding deposits as cash deposits with the central bank.

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Definitions:

Pancreas

A glandular organ located in the abdomen that plays a crucial role in digestion and insulin production.

Endocrine Glands

Glands in the body that release hormones directly into the bloodstream to regulate various bodily functions.

Sympathetic Nervous System

Part of the autonomic nervous system that activates the body's fight-or-flight response during perceived threats.

Stress

A physical, mental, or emotional factor that causes bodily or mental tension and may be a factor in disease causation.