Jane has just deposited $2,000 in her checking account. she knows that the bank will keep part of these funds on hand and loan out the rest. this is an example of

Question

Business

Alfred Salas

31 July, 06:23

Jane has just deposited $2,000 in her checking account. she knows that the bank will keep part of these funds on hand and loan out the rest. this is an example of

+1

Answers (1)

Know the Answer?

Madden Liu · Answer 1

The above is an example of Fractional-reserve banking. It is the practice whereby a bank accepts deposits, makes loans or investments, and holds reserves equal to a fraction of its deposit liabilities. Reserves are held as currency in the bank, or as balances in the bank's accounts at the central bank.