In a system of 100-percent-reserve banking,the purpose of a bank is to
A)make loans to households.
B)influence the money supply.
C)give depositors a safe place to keep their money.
D)buy and sell gold.

Question

Quizplus · Accepted Answer

In a system of 100-percent-reserve banking, the bank's role is to provide a secure place for depositors to store their money. The bank cannot make loans using the depositor's funds, nor can they influence the money supply. The bank's only function is to safeguard the funds entrusted to it by the depositors. The option D is also not viable as banks in this system won't deal with gold.

In a System of 100-Percent-Reserve Banking,the Purpose of a Bank