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The Central Bank & Monetary Policy · Question 39 of 58

Question 39

MediumOriginal question

The RBI buys government securities worth ₹50 crore from banks. If the reserve ratio is 10%, deposits in the banking system can rise by up to

Options for question 39

Show the answer and explanation
CorrectNot quiteAnswer D

Correct answer: D

Explanation

  1. Banks' reserves rise by 50; the multiplier is 1 ÷ 0.1 = 10.

  2. Deposits can rise by 50 × 10 = ₹500 crore.

Concept
OMO purchase and deposits
Typical time
70 s
Your time
—
The rule this testsOpen market operations
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Ten questions from The Central Bank & Monetary Policy, at your own pace.

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