Choose the Statement That Is Incorrect

Multiple Choice

Choose the statement that is incorrect.

A) 100 percent reserve banking is a system in which banks keep the full amount of their depositors' funds as a cash reserve.
B) Fractional- reserve banking was invented by gold prospectors in the Canadian Yukon during the gold rush.
C) Fractional- reserve banking is a system in which banks keep a fraction of their depositors' funds as a cash reserve and lend the rest.
D) The Austrian School of economists say that fractional- reserve banking violates property rights because the bank has no legal right to lend a deposit to someone else.
E) The requirement to hold 100 percent reserves lowers bank profits.