The banking system of the United States is a ___________ reserve system because banks are required by the Fed to hold reserves equal to a specified percentage of their deposits.

Question

Quizplus · Accepted Answer

The description provided in the question fits the definition of a fractional reserve system, where banks are required to hold only a fraction (specified percentage) of their deposits as reserves and are allowed to lend out the remaining amount. This is a common system used in many countries, including the United States. Option A is not a specific term used to describe any particular banking system. Options C and D do not accurately describe the reserve requirements of banks. Option E is incorrect as there is a specific term used to describe the US banking system.

The Banking System of the United States Is a ___________