Question

Q.1 Read the following statements-Assertion (A) and Reason (R):​

Answer 1

1. D. Assertion A is false but Reason R is true.

Total deposit creation= Initial deposits * (1/LRR)

The total amount of deposits created will be determined by initial deposits and Legal Reserve Ration(LRR).

How many times the total deposits will be of the initial deposits will be determined by the LRR. This is given by-

Money Multiplier= 1/LRR.

2. Both Assertion A and Reason R are true and R is the correct explanation of A.

M1= currency notes and coins with public + DD of the people with commercial banks.