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Which of the following is true about a fractional reserve banking system? It is likely to fail as most people demand all of their money
Which of the following is true about a fractional reserve banking system?
- It is likely to fail as most people demand all of their money each day.
- The central bank does not allow for this type of system.
- It allows banks to loan out a portion of deposits and therefore create money.
- There are no regulations concerning the portion of reserves banks must hold.
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