Under a Fractional Reserve Banking System

question 11

Multiple Choice

Under a fractional reserve banking system,

• A)only a fraction of the banks in the system are allowed to create money
• B)only a fraction of the banks in the system have reserves
• C)the claims outstanding against the bank are only a fraction of the bank's total reserves
• D)each bank must deposit a fraction of its reserves with the Federal Reserve Bank
• E)bank reserves represent only a fraction of bank deposits

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Definitions:

Bargain Hard

The practice of negotiating forcefully or assertively to achieve favorable terms.

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A principle in game theory stating that there is no advantage for any player to alter their strategy if all other participants maintain their current strategies.

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A game theory model where all players make their decisions or moves at the same time, without knowledge of the others' choices.

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A situation in game theory where two individuals acting in their own self-interest do not produce the optimal outcome.