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gavmur [86]
3 years ago
11

Why do banks retain a fractional reserve?

Business
1 answer:
nevsk [136]3 years ago
7 0
Because banks hold reserves in amounts that are less than the amounts of their deposit liabilities, and because the deposit liabilities are considered money in their own right, fractional-reserve banking permits the money supply to grow beyond the amount of the underlying base money.
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Answer:

A - The Short Run Aggregate Supply curve shifts to the right. 

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If producers believe a recession is imminent and they reduce the amount of machinery purchased, the quantity supplied would reduce shifting the Short Run Aggregate Supply curve to the left.

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