a. the banking system in the united states is referred to as a fractional reserve banking system because multiple choice 1 banks hold a fraction of deposits in reserve. a fraction of the money is lent out. a fraction of all monetary assets are held in banks. banks keep a fraction of reserves available. b. in a fractional reserve system, deposit insurance multiple choice 2 guarantees that depositors will always get their money, thus avoiding most bank runs. provides additional funds that can be lent out. is absolutely necessary or the banking system would collapse. raises the fraction of deposits that banks must keep available.

Fractional-reserve banking is the system of banking operating in nearly all countries worldwide, under which banks that take deposits from the public are needed to hold a proportion of their deposit arrears in liquid means as a reserve, and are at liberty to advance the remainder to borrowers.

With a fractional reserve banking system, a fall in bank reserves results in multiple cascades in demand for deposit money. Deposits are insured by the Federal Deposit Insurance Corporation.

In a system known as fractional reserve banking, only a portion of bank deposits are guaranteed by factual cash that's on hand and accessible for withdrawal.

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