With a CRR of 20 per cent, reserves of Rs 100 can support total deposi…

Question

With a CRR of 20 per cent, reserves of Rs 100 can support total deposits of:

Accepted Answer

A. Rs 500

1. Each round of lending returns as deposits.
2. Deposits grow till they reach Rs 500.
3. The money multiplier is 5.
_Source: syllabus Introductory Macroeconomics, Chapter 3, Money and Banking._

Answer

Rs 100

Answer

Rs 200

Answer

Rs 1,000

With a CRR of 20 per cent, reserves of Rs 100 can support total deposits of:

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