Question

calculate the legal reserve requirements of initial deposit of ₹200 crores lead to creation of total deposit of ₹1600 crores
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Answer 1

Answer:

Total deposits =1,600 crores; Initial deposit =Rs.200 crores

Money Multiplier = Total Deposit/Initial Deposits

Initial Deposits

Total Deposit

=1,600/200=8

We also know: Money Multiplier = 1/LRR

It means, 8= 1/LLR

.

Or, LRR=0.125 or 12.5%.

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