What is a fractional reserve ...

[tth]

What is a fractional reserve system?

Question 2

Which of the following economic theories became popular in the 1930s in response to the shortcomings of existing theories of the Great Depression?
 a. New classical theory
  b. Classical theory
  c. Traditional Keynesian theory
  d. Monetarist theory
  e. New Keynesian theory

[peter]

Answer to Question 1

In order for banks to continue to do business in an orderly fashion and for depositors to have access to their deposits, the banks are required by law to keep cash on hand and reserves at the Federal Reserve in proportion to their checkable deposits. Banks must keep adequate cash reserves on hand to meet the needs of customers who wish to convert their checkable deposits into currency or spend them on goods or services.

Answer to Question 2

c