An argument in favor of fractional-reserve banking is that A) ...

[dmcintosh]

An argument in favor of fractional-reserve banking is that
 
  A) unregulated institutions would be riskier than regulated fractional-reserve banks.
  B) it increases the precision of the central bank's control over the quantity of money.
  C) a bank deposit is owned by the depositor, so the bank has no legal right to lend the deposit to someone else.
  D) it decreases the risk of a bank running out of cash.

Question 2

France's government is running a budget deficit. With no Ricardo-Barro effect, which of the following events will occur?
 
  I. The supply curve of loanable funds will shift leftward.
  II. A higher real interest rate crowds out investment.
  III. Saving increases.
  A) I and II
  B) II and III
  C) I only
  D) III only

[mcomstock09]

Answer to Question 1

A

Answer to Question 2

B

[dmcintosh]

Correct answers!

[mcomstock09]

Great! Please up vote