Use the Following Example for to Answer the Next Five

question 14

Multiple Choice

Use the following example for to answer the next five questions:
Imagine that you deposit $25,000 in currency (which you had been storing in your closet) , into your checking account at the bank. Assume that this institution has a required reserve ratio of 25%.
-What is true about banks in a fractional reserve banking system?

• A) Banks can lend all of the deposits that are received.
• B) Banks have to purchase gold that has the value of the deposits received.
• C) Banks must deposit all cash from depositors with the Federal Reserve.
• D) Banks face the risk of not having enough cash to meet withdrawal needs.
• E) Banks have to deposit all cash from depositors in their own bank vault.

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Definitions:

Memory

The faculty by which the mind stores and remembers information.

Network

A group or system of interconnected people or things, often referring to computers or telecommunications.

Retrieval

The process of accessing and bringing into consciousness information stored in memory.

Stored Memories

Memories that have been retained over time and can be recalled or accessed when needed.