The principle of fractional reserve banking makes it possible for a
A) bank to make loans.
B) bank to print currency.
C) bank to avoid reserve requirements.
D) bank to sell securities.

Question

Quizplus · Accepted Answer

Fractional reserve banking allows banks to lend out a portion of the deposits they receive, while still maintaining a reserve requirement set by the central bank. This makes it possible for banks to make loans to borrowers who need access to capital, which can have a positive impact on economic growth. However, it does not allow banks to print currency or avoid reserve requirements, and while banks may sell securities, this is not a direct result of the fractional reserve banking system.

The Principle of Fractional Reserve Banking Makes It Possible for a