Question

How does the practice of fractional reserve banking affect banks?

O A. It gives banks the freedom to change interest rates on loans at any
time.
B. It prevents banks from profiting off loans they provide with
deposited funds.
C. It allows banks to keep only a small percentage of their deposits in
reserve.
D. It ensures that banks always have cash reserves equal to their
total deposits.

Answer 1

C. It allows banks to keep only a small percentage

Answer 2

The correct answer is C. It allows banks to keep only a small percentage of their deposits in reserve.