When a bank receives additional deposits,it gains an equal amount of reserves; when it loses deposits,it loses an equal amount of reserves.

Question

Quizplus · Accepted Answer

This statement is true according to the principles of fractional reserve banking. As banks receive deposits, they are able to lend out a portion of those funds, while keeping a fraction of the deposit as reserves. Therefore, when deposits increase, reserves increase by the same amount. Similarly, when deposits decrease, reserves decrease by the same amount.

When a Bank Receives Additional Deposits,it Gains an Equal Amount