What is true about banks in a fractional reserve banking system?
A) Banks can lend all of the deposits that are received.
B) Banks have to purchase gold that has the value of the deposits received.
C) Banks must deposit all cash from depositors with the Federal Reserve.
D) Banks face the risk of not having enough cash to meet withdrawal needs.
E) Banks have to deposit all cash from depositors in their own bank vaults.
Correct Answer:
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