Economics · Banking Systems
Which of the following is a characteristic of the Fractional Reserve Banking System?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Banks are required to hold 100% of their deposits as reserves
- 2Banks are allowed to lend out more than they hold in reserves✓
- 3Banks are required to hold less than 10% of their deposits as reserves
- 4Banks are not allowed to lend out any of their deposits
Correct answer
Banks are allowed to lend out more than they hold in reserves
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