The fractional reserve banking system allows banks to lend out all the money they receive as deposits.

Name: The fractional reserve banking system allows banks to lend out all the money they receive as deposits.
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Question

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The fractional reserve banking system requires banks to hold a certain percentage of deposits as reserves and only lend out a portion of them. The amount they can lend out is determined by a multiplier based on their reserve ratio.

The Fractional Reserve Banking System Allows Banks to Lend Out