An initial deposit of ₹1,000 is made and the reserve ratio is 10%. Counting the initial deposit as the first round, what are total deposits after three rounds?

₹2,710Correct answerYour answer₹3,000Correct answerYour answer₹3,439Correct answerYour answer₹10,000Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Deposits created: round 1 = 1,000; round 2 = 900; round 3 = 810.
Total after three rounds = 1,000 + 900 + 810 = ₹2,710; it keeps rising towards ₹10,000.

Worth noting

₹3,439 also counts ₹729, the deposit that would arrive only in a fourth round.

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

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

Explanation