Question

Which of the following accurately describes the requirements banks must

meet under a fractional reserve banking system?
A. Banks must keep a specific percentage of deposts on hand,
B. Banks must get government approval for all loans
C. Bariks must pay specific fraction of their assets in teles,
CR Banisteseve the right to raise interest rates at any time

Answer 1

A. Banks must keep a specific percentage of deposits on hand.

Step-by-step explanation:

Fractional reserve banking is known to be a system whereby bank deposits of a fraction are actually backed the cash on hand which is usually available for withdrawal. In the fractional reserve banking, banks re required to keep a certain amount of deposits on hand. This deposit on hand is known as bank's reserves. actually, banks are not required to keep the entire amount on hand.

Option A is the correct answer.