Question

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In an economy, currency with the public= Rs 4000
Bank's reserves= Rs 1000
Currency deposit ratio= 40%
Reserve ratio= 10%
a) Find the money supply in the economy.
b)Now, suppose the currency deposit ratio changes to 20%. If Central Bank wants to maintain the money
supply at its present level by changing the reserve ratio, what will be the new reserve ratio?​

Answer 1

Explanation:

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