The Fractional Reserve Banking System Refers to a System in Which

question 197

Multiple Choice

The fractional reserve banking system refers to a system in which banks

• A) hold reserves equal to a fraction of their deposit liabilities.
• B) keep 100% of their liabilities always on reserve.
• C) forbid the removal of more than a fraction of demand deposits per day.
• D) keep only a fraction of each person's loans.

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Definitions:

Inductive Reactance

The opposition to the change in current flow in a circuit element caused by its inductance, affecting the phase angle between voltage and current in AC circuits.

Reactive Power

The component of electric power that oscillates between the source and load, associated with the energy stored in the field of an inductor or capacitor.

Inductive Reactance

The opposition that an inductor presents to alternating current, due to the inductor's ability to store energy in a magnetic field.

Parallel Circuit

An electrical circuit in which components are connected across common points or junctions, providing multiple paths for current to flow.