The Fractional Reserve System of Banking Evolved Because

question 54

Multiple Choice

The fractional reserve system of banking evolved because

• A)goldsmiths did not have safes large enough to hold all their gold deposits.
• B)there was always a dire need for additional money.
• C)goldsmiths knew that on any given day, only a few depositors would come to claim their deposits.
• D)goldsmiths knew that they would not be prosecuted for lending out money they did not have.

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Definitions:

Good Faith Purchaser

An individual who buys property without knowledge of any existing claims, disputes, or faults of the property, thereby obtaining legal ownership.

Security Liens

A legal right or interest that a creditor has in the debtor's property, lasting usually until the debt that it secures is paid.

Title to Goods

refers to the legal right to own, use, or sell a specific item or piece of property.

Negotiable Document

A legal document guaranteeing payment or delivery of assets that can be transferred from one party to another, often used in trade and finance.