Economy, asked by vk28102003, 9 days ago

In which of the following case the credit creation will be unlimited (Choose correct alternative) (a) CRR is 70% (b) primary deposits are zero (c) secondary deposits are zero (d) none of these​

Answers

Answered by Anonymous
2

The credit creation will be unlimited in none of the options.

  • In the process of advancing loans and accepting deposits from the general public, when the commercial banks are able to loan more than what they receive, it is then called creation.
  • When a customer deposits money in the bank, some percentage of the money is kept with the Reserve Bank of India which is called the cash reserve ratio and the rest is loaned out to the public.
  • The banks cannot have unlimited credit because the RBI has control over their credit creation. They use various quantitative and qualitative methods for credit control.
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