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MMLU-Pro / 7386 / What is meant by "fractional reserve" banking?

Problem

Answer published by the source. Consult the official source to check your work against its answer.

question

What is meant by "fractional reserve" banking?

category

economics

options

  1. Fractional reserve banking is the practice where banks lend out a portion of their deposits while keeping a fraction in the form of gold reserves.
  2. Fractional reserve banking permits banks to keep a varying reserve ratio depending on the size of the deposit.
  3. Fractional reserve banking is when banks are required to keep 100% of their deposits in cash.
  4. Fractional reserve banking means that banks keep all of their deposits in cash.
  5. Fractional reserve banking refers to the practice of banks lending out all their deposits.
  6. Fractional reserve banking is a system where banks are required to keep only a fraction of their deposits in liquid form and can invest the remainder in government bonds only.
  7. Fractional reserve banking means that banks keep less than 100% of their deposits in cash, placing the rest in income-earning investments.
  8. Fractional reserve banking allows banks to lend out exactly 50% of their deposits and requires them to hold the other 50% in reserve.
  9. Fractional reserve banking mandates that banks hold a fixed reserve of 20% of their deposits and are free to use the rest without restrictions.
  10. Fractional reserve banking is the system in which banks are allowed to issue loans equal to the amount of deposits they have, without maintaining any reserves.

src

stemez-Economics

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Source and history

upstream_id / Original problem ID
7386
task_id
94eb6d7d-5c10-505f-b788-cb7f05660886
task_key
default--test--7386
task_revision_id
1
config / split
default / test

Official source

initial import