Banking Answers

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Which of these scenarios best describes fractional reserve banking?Maria makes a deposit of $20,000, and the bank loans $18,000 to Mark so he can buy a carJamir makes a $1,000 deposit and then withdraws it one week later.Isabella splits her $5,000 deposit between two different banks.A bank manager trades old, worn $20 bills for new currency issued by the Federal Reserve.

What causes a bank run?Too many people try to withdraw their deposits at the same time.Banks refuse to loan out deposited funds.The Federal Reserve conducts an inspection of a bank’s fractional reserve.Interest rates fall too quickly.