Fractional reserve banking is the system that
A) allows banks not to insure their deposits.
B) allows banks not to join the Federal Reserve System.
C) limits banks' activities from crossing state lines.
D) allows banks to keep smaller reserves than their deposits.
D
You might also like to view...
Vertical relationships can increase profits through
a. providing a mechanism for firms from evading regulation b. creating a double-markup problem c. making the incentives of manufacturers and retailers unaligned d. preventing price discrimination
An annually balanced budget: a. is the surest path to economic stability
b. is required by the U.S. Constitution. c. dampens cyclical swings by decreasing government spending during expansions and increasing it during recessions. d. accentuates cyclical swings by increasing government spending during expansions and reducing it during recessions. e. is a goal that has only been achieved twice in the past 5 years.
The phenomenon that interest rates may be so low that increases in the money supply will have no impact on aggregate demand is called:
a) the horizontality of demand. b) the liquidity trap. c) the sterilization of money. d) monetary incapacitation.
Which of the following transactions leads to an inflow of funds on the U.S. financial account?
A) A U.S. resident purchases a share of stock on the Hong Kong exchange. B) A U.S. resident sells wheat to an African nation. C) A resident of China purchases U.S. government bonds. D) A resident of Mexico visits the United States.