An Argument in Favor of Fractional-Reserve Banking Is That

question 504

Multiple Choice

An argument in favor of fractional-reserve banking is that

• A) unregulated institutions would be riskier than regulated fractional-reserve banks.
• B) it increases the precision of the central bank's control over the quantity of money.
• C) a bank deposit is owned by the depositor, so the bank has no legal right to lend the deposit to someone else.
• D) it decreases the risk of a bank running out of cash.

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