Fractional banking system is fundamentally prone

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A fractional banking system is fundamentally prone to the (speculative, liquidity, bailout, or monopoly) problem because it creates more receipts for deposits than there are in reserves in the system. In a fractional banking system, a banking panic will likely:

A) lead to an increase in the currency/ deposit ratio

B) be impossible because the system is fundamentally sound.

C) Cause people to deposit more into their accounts to help save the bank.

D) Increase consumer confidence

Reference no: EM13737800

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