In a fractional-reserve banking system, the reserve-deposit ratio is:
A)equal to currency in bank vaults
B)equal to currency held by the public divided by deposits
C)100%
D)less than 100%

Question

Quizplus · Accepted Answer

In a fractional-reserve banking system, banks are only required to hold a fraction of the deposits they receive as reserves. Therefore, the reserve-deposit ratio is always less than 100%.

In a Fractional-Reserve Banking System, the Reserve-Deposit Ratio Is