The chartered banking system of Canada allows the system to lend:
A)by a multiple of its excess cash reserves.
B)one dollar for each dollar of its excess cash reserves.
C)less than one dollar for each dollar of its excess cash reserves.
D)more or less than a dollar per dollar of excess cash reserves.

Question

Quizplus · Accepted Answer

The chartered banking system in Canada operates on a fractional reserve basis, allowing banks to lend multiple times their excess reserves, effectively creating money through the lending process.

The Chartered Banking System of Canada Allows the System to Lend