Under Fractional Banking, When a Bank Lends to a Customer

question 22

Multiple Choice

Under fractional banking, when a bank lends to a customer

• A)the money supply increases.
• B)bank profitability is decreased.
• C)the bank is protected from a run.
• D)bank credit decreases.

---

Definitions:

Consideration

In contract law, it refers to something of value exchanged between parties as the basis for a contract.

Bargained-for Exchange

Bargained-for exchange is a legal concept where parties agree to provide something of value to each other, forming the basis of a contract.

Illusory Promise

A statement that appears to be a binding commitment but allows for so much discretion that it does not legally bind the party making it.

Promisor

The party in a contract who makes a promise to perform or provide a benefit to the promisee.