The Fractional Reserve Banking System Refers to a System in Which

question 69

Multiple Choice

The fractional reserve banking system refers to a system in which banks:

• A) hold reserves equal to a fraction of their deposit liabilities.
• B) keep 100% of their liabilities always on reserve.
• C) forbid the removal of more than a fraction of demand deposits per day.
• D) keep only a fraction of each person's demand deposits.

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Definitions:

Education

The method of being taught or teaching methodically, particularly in an educational institution like a school or university.

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External Cost

A cost of production or consumption that is not borne by the producer or consumer, but by society in general, such as pollution.

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Synthetic materials made from polymers that can be molded into different shapes and are used widely in goods and packaging.