Question

The value of credit multiplier will be high when Legal Reserve Ratio is : *

Answer 1

Answer:

credit multiplier=1/LRR

Explanation:

suppose LRR=20%

so credit multiplier=1/20=5times

suppose it rises to 25% ie LRR =25%

Credit multiplier=1/25=4times

this prove that Credit multiplier will be higher when LRR is less