Multiple Choice
Identify the correct statement regarding a fractional reserve banking system.
A) Only a fraction of the banks in the system are allowed to create money.
B) Only a fraction of the banks in the system have reserves.
C) The claims outstanding against the bank are only a fraction of the bank's total reserves.
D) Each bank must deposit a fraction of its reserves with the Federal Reserve Bank.
E) Bank reserves represent only a fraction of bank deposits.
Correct Answer:
Verified
Correct Answer:
Verified
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