Because the Banking System Operates Using Fractional Reserves

question 203

Multiple Choice

Because the banking system operates using fractional reserves,

• A) the money multiplier is greater than one.
• B) excess reserves are equal to zero.
• C) required reserves are equal to 100 percent.
• D) banks can loan out only their required reserves.
• E) the money multiplier must be equal to zero.

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Definitions:

Operations

The day-to-day activities necessary for an organization to function effectively, including production, sales, and administration processes.

Articles of Partnership

A document that formalizes an agreement between parties to form a business partnership, outlining the roles, responsibilities, and share of profits among the partners.

Annual Salary

The total amount of money that an employee is paid over the course of a year for their work.

Capital Balance

Represents the amount of money that the owners of a business have invested in it or the net worth of the business.