In a Fractional Reserve Banking System

question 94

Multiple Choice

In a fractional reserve banking system

• A) banks are required to keep all deposits on hand so that they can pay their depositors when they desire to withdraw funds.
• B) banks are required to keep a fraction of deposits in bonds.
• C) banks are required to keep a fraction of all deposits on hand and send the rest to the Fed.
• D) banks do not keep sufficient reserves on hand to cover 100 percent of their depositors' accounts.

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Definitions:

Profit-Maximizing

A strategy where businesses aim to achieve the highest possible profit given their resources, market conditions, and constraints.

Output Level

Refers to the total quantity of goods or services produced by an entity in a given period.

Economic Profit

The difference between a firm's total revenue and all costs, including both explicit and opportunity costs, indicating the overall profitability beyond the financial gain.

Demand Schedule

A table that lists the quantity of a good or service that consumers are willing and able to purchase at various prices.