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Which of the following happens when you deposit money?
Bank keeps all of it untouched
Bank invests some of it and lends some of it
Bank invests some of it
Bank lends some of it
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GPT-5 mini
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Bank invests some of it and lends some of it.
Explanation: Under ordinary fractional-reserve banking, a bank holds a portion of your deposit as reserves (cash in the vault and balances at the central bank) to meet withdrawals, and uses the remainder to make loans or buy investments. It does not keep all of it untouched. (Only in rare 100%‑reserve models would a bank keep everything.)
Explanation: Under ordinary fractional-reserve banking, a bank holds a portion of your deposit as reserves (cash in the vault and balances at the central bank) to meet withdrawals, and uses the remainder to make loans or buy investments. It does not keep all of it untouched. (Only in rare 100%‑reserve models would a bank keep everything.)
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