Question

LRR =40%
Initial loan = 3,00,000
Find (1) Money Multiplier
(1) Total Money creation​

Answer 1

Answer:

the answer is 1200000 this is correct

Answer 2

Answer:

Total Money creation = 12,50,000

Initial deposit  =  5,00,000

Explanation:

let initial deposit be 'x'

then, LRR = 40% X 'x'

Initial Deposit - LRR =Loan

x - 40% X 'x'  = 3,00,000

x - 40x/100 = 3,00,000

10x-4x/10 = 3,00,000

6x/10=3,00,000

x=5,00,000

Total Money creation = Initial Deposit X 1/LRR

5,00,000 X 1/40%

5,00,000 X 1/0.40

5,00,000 X 100/40

12,50,000