Compared with a 100% Reserve System,fractional Reserve Banking

question 26

Multiple Choice

Compared with a 100% reserve system,fractional reserve banking

• A) makes the economy more stable
• B) creates a greater risk of bank insolvency
• C) gives banks less control over the money supply
• D) makes the money multiplier smaller
• E) means that each dollar of currency is backed by a smaller amount of gold

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