Explain the concept of money multiplier when currency deposit ratio is zero
Answers
Explanation:
Definition: The currency deposit ratio shows the amount of currency that people hold as a proportion of aggregate deposits.
Description: An increase in cash deposit ratio leads to a decrease in money multiplier. An increase in deposit rates will induce depositors to deposit more, thereby leading to a decrease in Cash to Aggregate Deposit ratio. This will in turn lead to a rise in Money Multiplier.
Also See: Currency Deposit Ratio, Broad Money to Reserve Money
Crowding Out Effect
When increased interest rates lead to a reduction in private investment spending such that it dampens the initial increase of total ...
PREV DEFINITIONDeadweight Loss
It is the loss of economic efficiency in terms of utility for consumers/producers such that the optimal or allocative efficiency is ...
NEXT DEFINITION
Related Defintions
Service Tax
Service tax is a tax levied by the government on service providers on certain service transactions,
Sovereign Risk
A nation is a sovereign entity. Any risk arising on chances of a government failing to make debt rep
Depression
: Depression is defined as a severe and prolonged recession. A recession is a situation of declining
Cross Elasticity Of Demand
: The measure of responsiveness of the demand for a good towards the change in the price of a relate
Statutory Liquidity Ratio
The ratio of liquid assets to net demand and time liabilities (NDTL) is called statutory liquidity r
Seasonal Adjustment
: This is a technique aimed at analyzing economic data with the purpose of removing fluctuations tha
Domestic Institutional Investors (diis)
: Domestic institutional investors are those institutional investors which undertake investment in s
Marginal Standing Facility
Marginal standing facility (MSF) is a window for banks to borrow from the Reserve Bank of India in a
True Cost Economics
: True cost economics is an economic model that includes the cost of negative externalities associat
Asset Turnover Ratio
Asset turnover ratio is the ratio between the value of a company’s sales or revenues and the value o.
Hello !
The currency-deposit ratio refers to the relationship between the amount of cash a person holds and the amount of money she maintains in readily accessible bank accounts, such as checking accounts. The formula for the currency-deposit ratio is cr = C/D.
Hope It Helps u :)