BANKING GENERAL KNOWLEDGE
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
20
|
|
|
10
|
|
|
5
|
|
|
50
|
Detailed explanation-1: -What is the value of money multiplier when LRR is 10%? The value of Money multiplier = 1/LRR = 1/0.1 = 10.
Detailed explanation-2: -Money Multiplier = 1/LRR or 1/r Where LRR is the legal reserve ratio. It is the minimum ratio of deposits that is legally required to be kept by the commercial banks of the economy with themselves and with the central bank of India, also known as the RBI.
Detailed explanation-3: -500 crores and LRR is 10%. Ans. Value of money multiplier = 1/LRR which is equal to 1/0.1 = 10 Initial deposit was Rs. 500 crores Hence Total Deposit will be Initial Deposit × Money Multiplier = 500 ×10 = 5000 Crores www.vedantu.com 4 Page 5 Q17.
Detailed explanation-4: -Money multiplier = 1/LRR = 1/0.2 = 5.
Detailed explanation-5: -Money Multiplier = 1/LRR is the relation between LRR and money multiplier. LRR is the legal reserve ratio. You can read about the Money Supply in Economy – Types of Money, Monetary Aggregates, Money Supply Control in the given link.