Identify the Correct Statement Regarding a Fractional Reserve Banking System

question 30

Multiple Choice

Identify the correct statement regarding a fractional reserve banking system.

• A)Only a fraction of the banks in the system are allowed to create money.
• B)Only a fraction of the banks in the system have reserves.
• C)The claims outstanding against the bank are only a fraction of the bank's total reserves.
• D)Each bank must deposit a fraction of its reserves with the Federal Reserve Bank.
• E)Bank reserves represent only a fraction of bank deposits.

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