Explain What Is Meant by Fractional Reserve Banking

question 102

Essay

Explain what is meant by fractional reserve banking.

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Definitions:

Work in Process

This term refers to items that are in the production process but not yet completed, highlighting the inventory's ongoing status during manufacturing.

Direct Materials

Raw materials that are directly incorporated into a finished product and can be easily traced to it.

Direct Labor

The labor costs of employees who are directly involved in the production of goods or services.

Manufacturing Overhead

Indirect production expenses including costs for factory equipment depreciation, quality control, and facility rent that are not directly linked to individual products.