The idea that banks hold only a portion of deposits and lend the rest out is called the _____ system.
A) fractional reserve banking
B) partial banking
C) double-entry bookkeeping
D) loan-maximization

Question

Quizplus · Accepted Answer

The idea that banks hold only a portion of deposits and lend the rest out is known as fractional reserve banking. This system allows banks to earn interest on loans while still having enough cash on hand to handle withdrawals by depositors.

The Idea That Banks Hold Only a Portion of Deposits