Which of the Following Correctly Describes Fractional Reserve Banking

question 98

Multiple Choice

Which of the following correctly describes fractional reserve banking?

• A) The federal government only insures a fraction of the deposits at most banks.
• B) Banks keep a fraction of their loans with other banks to maintain the quality of their loan portfolio.
• C) Banks can loan out all but a small fraction of its own money, but must hold all money deposited at the bank on reserve in bank vaults.
• D) Banks can loan out all but a fraction of its own money, but must hold all money deposited at the bank on reserve in bank vaults.

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Definitions:

Behaviorism

A theory of learning based on the idea that all behaviors are acquired through conditioning, focusing on observable behaviors rather than internal states.

Habituation Technique

A method used in psychology to reduce the reaction to a repeated stimulus over time, demonstrating one of the simplest forms of learning.

Longitudinal Technique

A research design that involves repeated observations of the same variables over a period of time, often years or decades.

Novelty Technique

A method or strategy employed to capture interest or attention through the introduction of new or unusual elements.