Explain what is meant by fractional reserve banking.
What will be an ideal response?
Fractional reserve banking is the system that exists in the United States whereby financial institutions are required to keep only a fraction of their customer check able deposits in reserve. They may lend out or invest the remainder in qualified securities. This system allows banks to “create” money through the loans that they make.
You might also like to view...
Refer to the above table. If opportunity costs are constant, then the opportunity cost of producing good B in country X is ________, and the opportunity cost of producing good B in country Y is ________
A) 1 unit of A; 2 units of A B) 1 unit of A; 0.5 unit of A C) 1 unit of B; 2 units of A D) 1 unit of A; 0.5 unit of B
The fact that invention is based largely on fixed costs and is a public good means that which of the following is not relevant to the process?
a. average total cost b. marginal cost c. external cost d. average variable cost
Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process: Name of CompanyRevenuesCost of Purchased InputsCitrus Growers Inc.$0.750Florida Jam Company$2.00$0.75The Corner Store$2.50$2.00 If the oranges were grown and the jam produced in the year 2017, but the marmalade was sold at The Corner Store in the year 2018, what is the contribution of these transactions to GDP in the year 2018?
A. $2.00 B. $0.00 C. $0.50 D. $2.50
When UPS implemented changes which allowed it to deliver more packages with the same number of workers and planes, this represented a positive technological change
Indicate whether the statement is true or false