The Fractional Reserve Banking System

question 62

Multiple Choice

The fractional reserve banking system

• A) requires that banks keep excess reserves.
• B) imposes limits on the amount of money that banks can create.
• C) requires banks to hold a portion of their demand deposits as cash.
• D) precludes banks from creating money.

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Definitions:

Stakeholders

Individuals or groups that have an interest or stake in the outcome of a project, decision, or outcome.

Shareholders

Individuals or entities that own shares in a corporation, giving them ownership interests and rights, such as voting on corporate matters.

Debtors

Individuals or entities that owe money to another entity, typically referring to those owing money as recorded by the creditor.

Creditors

Individuals or institutions that lend money or extend credit to others, expecting to be repaid in the future, often with interest.