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Money Creation by Banks · Question 22 of 58

Question 22

MediumOriginal question

Continuing: the ₹900 loan is spent and redeposited in the banking system. With the reserve ratio at 10%, the second-round loan is

Options for question 22

Show the answer and explanation
CorrectNot quiteAnswer C

Correct answer: C

Explanation

  1. The new deposit is 900; reserves on it = 90.

  2. New loan = 900 − 90 = ₹810.

Concept
Second round of lending
Typical time
70 s
Your time
—
The rule this testsDeposit creation, round by round
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Ten questions from Money Creation by Banks, at your own pace.

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Ten questions from Money Creation by Banks, at your own pace.

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