Question

The process of credit creation in economy is affected by

a. the amount of initial deposit

b. the LRR%

c. both (a) & (b)

d. None of the above

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Answer 1

Answer:

The process of credit creation in economy is affected by a. the amount of initial deposit.

Explanation:

Affects the creation of credit by commercial banks. Higher the cash of commercial banks in the form of public deposits, more will be the credit creation. However, the amount of cash to be held by commercial banks is controlled by the central bank.