Modern bankers

Question

Modern bankers

Quizplus · Accepted Answer

Modern bankers follow a system called fractional reserve banking, where they hold only a fraction of their assets in the form of reserves against their deposits. This allows them to lend out more money than they actually have in reserves, which expands the money supply. Option A is incorrect as modern bankers do not print currency themselves. Option B is incorrect as extending additional loans actually increases the supply of money. Option D is not entirely accurate as excess reserves do not directly increase profits, but can indirectly affect the bank's ability to make further loans.

Modern Bankers