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ludmilkaskok [199]
2 years ago
8

Maria makes a deposit of $10,000 into her Smalltown Bank savings account. Smalltown Bank holds 20% of her deposit, then lends th

e remaining $8,000 to Ben to buy a new car. This practice of retaining only a portion of deposits on hand is called ________.
a. the gold standardb. fractional reserve bankingc. the Federal Reserve systemd. representative money
Business
1 answer:
zloy xaker [14]2 years ago
3 0

Answer: Fractional reserve banking

Explanation:

Fractional-reserve banking is a common form of banking that is practised by commercial banks worldwide. It involves banks in every part of the world. Fractional reserve banking is the acceptance of deposits from customers and then making loans to borrowers, while the reserve a fraction of the deposit liabilities of the bank is held.

From the question, Maria makes a deposit of $10,000 into the savings account she uses at Smalltown Bank and the bank holds 20% of the deposit she made and later lends the remaining $8,000 to another customer is an example of fractional reserve banking.

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Answer:

The price of ice cream increases - The demand for caramel topping will decrease

The price of caramel topping decreases - The demand curve for caramel topping will remain the same. 

The price of butterscotch topping increases - The demand for caramel topping will increase. 

Explanation:

If the price of icecream increases , it would become expensive to make them. So producers would reduce quantity supplied of ice cream. As a result of the reduced supply, there would be less demand for caramel toppings.

Caramel and butterscotch toppings are subsituites. If the price of butterscotch toppings increase, the demand for caramel toppings would increase.

If the price of caramel toppings reduce, the quantity supplied would fall. This would lead to a movement along the demand curve and not a shift of the demand curve.

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<u>True</u>

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