•Economics•
Why does a country's money supply increase when banks use fractional
reserve banking?
O A. Foreign currency is automatically converted into the country's own
currency.
OB. Money deposited in banks can be used for loans instead of held in
reserve.
O
C. Banks are given the power to print paper money and mint coins as
needed.
OD. Investors are not allowed to keep large sums of money in banks
for long periods.

Money deposited in banks can be used for loans instead of held in reserve is the country's money supply increase when banks use fractional reserve banking. Hence, option B is correct.

What is money deposits?

Money kept at a bank is considered to as a deposit in the world of banking. A deposit is a commitment in which money is handed over to someone else to keep safe. A fraction of money used as security or collateral for the delivery of a good can also be referred to as a deposit.

If people deposit funds with the banker, it will sometimes be available in their account straightaway or the following workday day, depending on the bank's regulation. Your teller will be in an opportunity to inform the person.

Thus, option B, Money deposited in banks can be used for loans instead of held in reserve is correct.

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