Question

Suppose in an economy, the initial deposits of ₹ 400 crores lead to the creation of total deposits worth ₹ 4000 crores. Under the given situation the value of reserve requirements would be________
a) 0.01 b) 1 c) 0.1 d) 0.​

Answer 1

Answer:

Calculate the value money multiplier and the total deposit created if initial deposit is of Rs. 500 crores and LRR is 10%. Ans: Money multiplier = 1/LRR which is equal to 1/0.1=10 Initial deposit Rs. 500 crores Total deposit = Initial deposit x money multiplier = 500 x 10 = 5000 crores.

Explanation:

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