Question

banks that practice fractional reserve banking are able to
a.change the interest rates on loans for any reason
b.lend most of the money they hold as deposits
c.return all of their deposited cash at any time
d.provide financial services to customers at no cost

Answer 1

Answer: B; lend most of the money they hold as deposits

Explanation: Just did it on A pex

Answer 2

The correct option is B.  Fractional reserve banking can lend most of the money they hold as deposits. A banking system in which the remaining money is lent out after keeping a small amount on hand. Store money in a safe. the money kept in cash drawers and a bank's vault.

Who invented the Fractional Banking concept?

Banking using fractional reserves may have existed as early as the Middle Ages. However, the process as we know it now began in the 17th century with the establishment of the first central bank ever Riksbank, in Sweden. Instead of just storing cash in a vault, it was established to boost the economy and increase consumer deposits.

Banks can offer credit through fractional reserve banking, which represents quick liquidity to depositors. Additionally, banks operate as financial middlemen for borrowers by giving them longer-term loans.

Learn more about Frictional Banking here:

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