Question

When a bank keeps $12 from a $100 deposit as legal reserves, it is using

a.
the Federal Reserve System.
c.
a legal reserve system.
b.
a fractional reserve system.
d.
a fractional deposit system.

The Fed has defined different categories of money, M1 and M2, according to the money's
a.
source.
c.
form.
b.
function.
d.
value.


The real rate of interest:

Answer 1

When a bank keeps $12 from a $100 deposit as legal reserves, it is using a fractional reserve system. The correct option among all the options that are given in the question is option "b".

The Fed has defined different categories of money, M1 and M2, according to the money's function. The correct option among all the options that are given in the question is option "b".