If fractional reserve banking exists,then:
A)banks need only keep a portion of each deposit on hand.
B)the money multiplier is greater than 1.
C)money can be created in the economy through banks.
D)All of these are true.

Question

Quizplus · Accepted Answer

Fractional reserve banking allows banks to keep only a portion of each deposit on hand, which enables them to create new money in the economy through loans and other forms of credit. As a result, the money multiplier is greater than 1, meaning that each dollar deposited into the banking system can generate multiple dollars of new credit and money. Therefore, all of the choices are true.

If Fractional Reserve Banking Exists,then