If a bank has total deposit liabilities of $1,500,000 but keeps only $100,000 in cash reserves, it is engaging in fractional reserve banking.

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Fractional reserve banking is a system in which banks keep only a fraction of their deposits in reserves and loan out the rest. In this scenario, the bank has only kept $100,000 in reserves, which is a fraction of its total deposit liabilities of $1,500,000. Therefore, it is engaging in fractional reserve banking.

If a Bank Has Total Deposit Liabilities of $1,500,000 but Keeps