This assignment covers the concepts we have been covering this week, banks and money. I expect well
Question:
This assignment covers the concepts we have been covering this week, banks and money. I expect well thought-out responses that show me that you have gone through the material. Without good responses I cannot gauge your level of understanding. If you provide me with one sentence responses, you will probably not get a good grade. Use good spelling and grammar, not doing so says a lot about the level of work you have put into the assignment. 1. In detail, explain the difference between a fractional reserve banking system and a 100% reserve banking system. 2. In a fractional reserve banking system, what happens if everyone who deposited money into banks (all at once) decided to withdraw all their money? 3. How would the above scenario play out under a 100% reserve baking system? 4. In detail, explain how in a fractional reserve banking system bank deposits and bank lending lead to an expansion of the money supply (amount of money in circulation within an economy).