Question

Label each statement as either "True" or "False" below.

1.In the United States, banks keep the entire value of all customer deposits in the bank vault to meet customer withdrawals.

2.Banks typically loan out a portion of customer deposits.

3.Bank runs occur when many customers attempt to withdraw deposits from the bank at once, and the bank is unable to pay all customer deposits.

4The Federal Deposit Insurance Corporation protects bank deposits from bank failure.

5.The fractional reserve banking system requires all banks to keep the total value of customer deposits in the bank vault to prevent bank runs.

Answer 1

The answer is

1. False

2. True

3. True

4. True

5. False

Step-by-step explanation:

1. False. Banks does not keep the entire value of all customer deposits in the bank vault. Some customers deposit will be given out as loan and other Investment opportunities.

2. True. Loans given out to borrowers are part of customers' deposits.

3. True. Bank run occurs when customers try to withdraw their money from a bank at once, maybe the bank is in crisis.

4. True. Federal Deposit Insurance Corporation protects customers' deposits

5. False. The fractional reserve banking system requires all banks to keep part of customer deposits in the bank vault to prevent bank runs