An Argument in Favor of 100 Percent Reserve Banking Is

question 573

Multiple Choice

An argument in favor of 100 percent reserve banking is that

• A) a bank deposit is owned by the depositor, so the bank has no legal right to lend the deposit to someone else.
• B) banks should be allowed to lend deposits in order to increase their profits and strengthen the banking system.
• C) unregulated institutions would be riskier than regulated fractional-reserve banks.
• D) it would limit the precision of the central bank's control over the quantity of money.

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Definitions:

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

Indirect Labor

Labor costs not directly associated with the production of goods or services, such as salaries of supervisors and maintenance staff.

Shop Foreman's Salary

The compensation paid to the individual responsible for overseeing the work and workers in a shop or factory setting.

Raw Materials Used

The cost of materials that are used in the production process of a company's goods or services.