Question

The main feature of fractional reserve banking is that banks:

a) lend out as little as possible to avoid becoming insolvent.
b) keep most of its deposits in a vault in order for customers to have easy access to cash.
c) keep a portion of deposits in reserves but lend out the rest.
d) invest all of its deposits in a combination of stocks and bonds.

Answer 1

c) keep a portion of deposits in reserves but lend out the rest.

Step-by-step explanation:

Fractional reserve banking -

It is the system , where the fraction of the bank deposits are backed by the actual cash money on hand and is for the withdrawal purpose .

This helps to expand economy of the country , by lending more .

The bank reserves certain amount with itself and the rest amount is given for the lending purpose .