Fractional reserve banking allows banks to 1 be susceptible

Fractional reserve banking allows banks to 1) be susceptible to bank runs. 2) earn profits without charging customers for holding their deposits. 3) have a strong influence on the economy. 4) all of the above. O5) none of the above.

Solution

Fractional reserve banking is the banking system where the banks hold only a small reserve of the total deposit they have with them. They can lend or invest the rest of the amount in the market. It makes the banks susceptible to the bank run and they earn a lot of profit form the investment and lending activities. and they also have a strong influence on the economy.

The answer is \"All of the above\".