Fractional reserve banking is useful for banks because it: A. pressures customers to accept higher interest rates on loans. B. allows the value of loans to exceed the value of cash reserves. C. combines the services of both commercial and retail banks. D. divides large accounts into smaller ones that are easier to manage​

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Fractional reserve banking is a banking system in which banks only hold a fraction of the money their customers' deposit as reserves. This allows them to use the rest of it to make loans and thereby essentially create new money. This gives commercial banks the power to directly affect the money supply.

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