Question 46
HardOriginal questionThe public withdraws ₹100 crore in cash from banks and keeps it at home. With a reserve ratio of 10% and banks fully lent out, deposits can fall by up to
Show the answer and explanation
CorrectNot quiteAnswer D
Correct answer: D
Explanation
Banks lose ₹100 crore of reserves.
To restore the 10% ratio, deposits must shrink by 100 × 10 = ₹1,000 crore.
- Concept
- The multiplier in reverse
- Typical timeTypical
- 100 s
- Your timeYours
- —
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