What Is Most Likely to Happen Under a Fractional Reserve

question 36

Multiple Choice

What is most likely to happen under a fractional reserve banking system?

• A) Banks hold more reserves than deposits.
• B) Banks generally lend out a majority of the funds deposited.
• C) Banks cause the money supply to fall by lending out reserves.
• D) Banks only accept savings deposits.

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Definitions:

North American Free Trade Agreement

A trade agreement between Canada, Mexico, and the United States designed to reduce tariff barriers and increase economic cooperation.

Tariffs

Taxes imposed by a government on imported goods, often used to protect domestic industries and regulate trade.

Trade Embargoes

Government-imposed restrictions on the exchange of goods and services with a particular country or group of countries.

USMCA

The United States-Mexico-Canada Agreement, a free trade agreement between these three countries that replaced NAFTA.