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Money Creation by Banks · Question 44 of 58

Question 44

HardOriginal question

The reserve ratio is 25%. To create total deposits of ₹2,000 crore, the initial deposit must be

₹250 croreCorrect answerYour answer₹500 croreCorrect answerYour answer₹1,500 croreCorrect answerYour answer₹8,000 croreCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer B

Correct answer: B

Multiplier = 1 ÷ 0.25 = 4.
Initial deposit = 2,000 ÷ 4 = ₹500 crore.

Concept: Initial deposit from total deposits
Typical timeTypical: 100 s
Your timeYours: —

The rule this testsThe money multiplier

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