True or False:
Having a fractional reserve banking system means that the central bank holds a specific fraction of GDP on reserve at all times.
A)True
B)False

Question

Quizplus · Accepted Answer

This is false.
Key Takeaway: Having a fraction reserve banking system actually means that a bank cannot lend out all of its deposits. In this situation, a fraction of total deposits must be held at all times and the rest can be lent out to consumers or businesses.

True or False: Having a Fractional Reserve Banking System Means That the Central