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:

Phospholipids

Lipids in which two fatty acids and a phosphorus-containing group are attached to glycerol; major components of cell membranes.

Hydrocarbons

Organic compounds consisting entirely of hydrogen and carbon, often used as fuels and solvents.

Hydrophobic

Not readily interacting with water; having less affinity for water molecules than they have for each other. Compare with hydrophilic.

Nonpolar

A type of covalent bond where electrons are shared equally between atoms, leading to a molecule that does not have distinct poles or charges.