Multiple Choice
Fractional reserve system means that
A) an intermediary funds itself with demand deposits and holds all of those liabilities in the form of liquid assets
B) an intermediary funds itself with demand deposits and holds only a fraction of those liabilities in the form of liquid assets
C) an intermediary funds itself with all equity and holds only a fraction of it in the form of liquid assets
D) an intermediary funds itself with commercial papers and holds a substantial portion of them in the form of liquid assets
E) none of the above
Correct Answer:
Verified
Correct Answer:
Verified
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