Question

Select all that apply

What are true statements about the history of the fractional banking system?
A. Traders would deposit their gold with goldsmiths.
B. The gold reserves represented over 100% of the total money supply.
C. The gold receipts were not accepted as a medium of exchange.
D. Goldsmiths put the paper receipts into circulation by making loans.
E. Goldsmiths issued paper receipts in excess of the amount of gold held.

Answer 1

The true statements about the history of the fractional banking system are that traders deposited their gold with goldsmiths, who put paper receipts into circulation by making loans, and issued paper receipts in excess of the amount of gold held.

Step-by-step explanation:

The true statements about the history of the fractional banking system are:

1. A. Traders would deposit their gold with goldsmiths. Goldsmiths acted as a safe place for traders to store their gold.
2. D. Goldsmiths put the paper receipts into circulation by making loans. Goldsmiths would issue paper receipts to individuals in exchange for their gold deposits, and then lend out these paper receipts.
3. E. Goldsmiths issued paper receipts in excess of the amount of gold held. Goldsmiths had more paper receipts in circulation than the actual amount of gold they held.