Under the Modern System of Fractional Reserve Banking, Banks

question 69

Multiple Choice

Under the modern system of fractional reserve banking, banks

• A)keep cash reserves equal to only a fraction of their deposit liabilities.
• B)loan out their excess reserves at interest, which is the key to their profitability.
• C)are always potentially vulnerable to runs.
• D)All of these responses are correct.

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Definitions:

Social Support

The assistance and comfort received from others, which can be emotional, informational, or tangible, contributing to an individual's coping mechanism.

Instrumental Aid

Assistance given to someone in the form of services or devices that support the completion of tasks or the achievement of goals.

Emotional Concern

A state of heightened sensitivity or worry about personal challenges impacting one's emotional well-being.

Personal Control

Confidence that people have in their ability to control the events that shape their lives.