In the fictional balance sheet of the chapter, if CRR = 20% and initial reserves with the bank are Rs 100, the maximum deposits the system can support are
ARs 500
BRs 100
CRs 200
DRs 400
Answer & Solution
Correct answer: A. Rs 500
Multiplier 1/0.20 = 5
100 × 5 = Rs 500. Loans expand to Rs 400 and deposits total Rs 500 at equilibrium.
Keep practising Unit 1A: Basic Economic Concepts and Production Systems
Browse all Unit 1A: Basic Economic Concepts and Production Systems questions for Maharashtra SSC (Class 10), or explore more Economics topics.
Related questions
A bank's balance sheet identity isWhich is a QUALITATIVE tool of monetary policy used by the RBI?Open Market Operations (OMO) by the RBI refers toIn the chapter's M₁ definition, M₁ equalsThe money multiplier in a single-bank fictional economy with cash reserve ratio CRR isCRR stands forThe central bank of India isWhich is NOT a function of money in a modern economy?