Question
What is the major difference between full-reserve banking and fractional-reserve banking?
A. Full-reserve banks only hold a portion of all deposits made while fractional-reserve banks hold 100% of every depositor's funds on hand.
B. Fractional-reserve banks borrow and store funds from lenders while full-reserve banks deal with corporations.
C. Fractional-reserve banks only hold a portion of all deposits made while full-reserve banks hold 100% of every depositor's funds on hand.
D. Fractional-reserve banks provide smaller loans compared to full-reserve banks.
A. Full-reserve banks only hold a portion of all deposits made while fractional-reserve banks hold 100% of every depositor's funds on hand.
B. Fractional-reserve banks borrow and store funds from lenders while full-reserve banks deal with corporations.
C. Fractional-reserve banks only hold a portion of all deposits made while full-reserve banks hold 100% of every depositor's funds on hand.
D. Fractional-reserve banks provide smaller loans compared to full-reserve banks.
Answers
GPT-4o mini
The correct answer is:
C. Fractional-reserve banks only hold a portion of all deposits made while full-reserve banks hold 100% of every depositor's funds on hand.
In fractional-reserve banking, banks keep a fraction of deposits as reserves and lend out the rest, whereas in full-reserve banking, banks keep the entirety of deposits in reserve and do not lend them out.
C. Fractional-reserve banks only hold a portion of all deposits made while full-reserve banks hold 100% of every depositor's funds on hand.
In fractional-reserve banking, banks keep a fraction of deposits as reserves and lend out the rest, whereas in full-reserve banking, banks keep the entirety of deposits in reserve and do not lend them out.