ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Rs 6000 crore
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Rs 4000 crore
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Rs 5000 crore
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Rs 3000 crore
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Detailed explanation-1: -18. If total deposits created by commercial banks are Rs. 12, 000, LRR is 25%, calculate initial deposit. Ans: Money Multiplier = 1/LRR = 1/025 = 4 Initial Deposit = Total Deposit / Money Multiplier = 12000 / 4 Page 6 Class XII Macro Economics www.vedantu.com 6 = Rs.
Detailed explanation-2: -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-3: -The initial deposits of ₹10, 000 have been made into the bank, and the banks are required to maintain 20% of the deposits with them as the LRR is 20%, therefore the bank has to maintain 20% of ₹10, 000 i.e. ₹2, 000 with itself and can lend the rest of the money i.e. ₹8, 000 as loans to the public.
Detailed explanation-4: -Answer. Or, LRR=0.125 or 12.5%.
Detailed explanation-5: -= 12, 500 crores. Was this answer helpful?