How Is It That the Banking System Is Able to Lend

Multiple Choice

How is it that the banking system is able to lend by a multiple of its excess reserves?

A) Banks only have to hold a fraction of their deposits as reserves and can lend the rest to borrowers.
B) Banks are required to hold only enough cash to meet the withdrawal needs of depositors.
C) Loans can be made to borrowers.
D) Required reserves have to be vault cash.
E) Banks must hold their required reserves at the Federal Reserve.