9 min read
This study guide covers fractional reserve banking, the money multiplier, and bank balance sheets (T-accounts). Key concepts include the reserve ratio, required reserves, excess reserves, calculating the money multiplier, and analyzing how changes in deposits and the reserve ratio affect the money supply. It also provides practice questions and a real FRQ example with answers to help prepare for the AP Macroeconomics exam.
Give us your feedback and let us know how we can improve
Question 1 of 10
Ready to dive into the world of banking? ๐ฆ Which of the following BEST describes fractional reserve banking?
Banks keep 100% of deposits in their vaults
Banks loan out all deposits without keeping any reserves
Banks hold a fraction of deposits as reserves and loan out the rest
Banks only accept deposits from the government