The main feature of fractional reserve banking is that banks:
A) lend out as little as possible to avoid becoming insolvent.
B) keep most of its deposits in a vault in order for customers to have easy access to cash.
C) keep a portion of deposits in reserves but lend out the rest.
D) invest all of its deposits in a combination of stocks and bonds.

Question

Quizplus · Accepted Answer

Fractional reserve banking is a system where banks keep a fraction of deposits as reserves and lend out the remainder, allowing them to create money through lending.

The Main Feature of Fractional Reserve Banking Is That Banks