The fractional reserve system of banking evolved because
A)goldsmiths did not have safes large enough to hold all their gold deposits.
B)there was always a dire need for additional money.
C)goldsmiths knew that on any given day, only a few depositors would come to claim their deposits.
D)goldsmiths knew that they would not be prosecuted for lending out money they did not have.

Question

Quizplus · Accepted Answer

Goldsmiths realized that only a small portion of the deposits would be claimed by depositors on any given day, so they began lending out the rest of the money, a practice that eventually became the fractional reserve system of banking.

The Fractional Reserve System of Banking Evolved Because