Fractional Reserve Banking Refers to a Banking System in Which

question 2

Multiple Choice

Fractional reserve banking refers to a banking system in which

• A)bank deposits are less than bank reserves.
• B)bank reserves are only a fraction of total deposits.
• C)bank reserves are only a fraction of desired reserves.
• D)bank loans are less than bank reserves.

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Definitions:

Economic Rent

The excess payment made to or for a factor of production over and above what would be needed to move it to its next best use.

Wage Rate

The standard amount of compensation given to employees per unit of time worked, often expressed as an hourly rate or annual salary.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good supplied.

Marginal Revenue Product Curve

A graph that shows the value of the additional output generated by employing one more unit of input, typically labor.