When can a bank make loans?

a.	when it has the minimum amount of required reserves
b.	only when it is confident that it can meet all the cash needs of depositors
c.	only when it has deposited all cash at the Federal Reserve
d.	when it has reserves greater than the amount of required reserves
e.	There is not enough information to solve this problem.

37. In a fractional reserve banking system, banks

a.	are able to create money when excess reserves are lent to individuals who need to borrow money.
b.	can lend all of the deposits that are received.
c.	must purchase gold that equals the value of the deposits received.
d.	must deposit all cash from depositors with the Federal Reserve.
e.	have to deposit all cash from depositors in their own bank vault.

308. The federal funds rate is the

a.	interest on deposits that private banks hold on reserve at the Federal Reserve.
b.	interest rate on loans between private banks.
c.	interest for loans from the Federal Reserve to private banks.
d.	income generated by the Federal Reserve through discount loans.
e.	mandatory portion of bank deposits that are set aside and not loaned out.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below The correct answer is b only when it is ... View the full answer