Question

A fractional reserve banking system might be in trouble if

a. one depositor wanted his (her) money returned.
b. one borrowing customer paid off the loan.
c. all borrowing customers paid off their loans.
d. all deposit customers wanted to withdraw their money.
e. None of the above.

Answer 1

fractional banking just means that they have a percent of the monies on reserve; d would be bad news .. since there isnt enough funds on hand to cover the withdrawals

Answer 2

i agree with amistre64, as if all depositors withdraw all their money at same time then banks will face liquidity problem. And hence will come in trouble.

Answer 3

D. I agree. There is not enough physical money in circulation that if everyone wanted their money there would not be enough in circulation.