In a Fractional-Reserve Banking System,a Bank

question 124

Multiple Choice

In a fractional-reserve banking system,a bank

• A) does not make loans.
• B) does not accept deposits.
• C) keeps only a fraction of its reserves in deposits.
• D) keeps only a fraction of its deposits in reserve.

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Definitions:

Complementary Demand

Refers to products or services for which the demand increases or decreases together because they are used together, like smartphones and data plans.

Double Markup

A pricing strategy where a product is marked up twice before it reaches the final consumer: first by the wholesaler then by the retailer, leading to a higher final price.

Upstream Firms

Companies involved in the early stages of production or supply chain, such as raw material extraction or initial processing, before manufacturing.

Double Marginalization

A scenario in which two or more firms at different stages of a supply chain apply their own markups, leading to inefficiencies and inflated prices for consumers.