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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