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Final answer:
Fractional reserve banking involves banks lending out a portion of depositors' money while keeping some for withdrawals, impacting the money supply statistics.
Explanation:
Fractional reserve banking is a system where banks do not keep all deposits in the vault, allowing them to lend out some of the depositors' money while keeping some to meet withdrawal demands. When a bank issues a loan in this system, it creates new money, impacting the overall money supply stats (The different forms of money in the government money supply statistics).
Learn more about Fractional Reserve Banking here:
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