ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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What is the value of multiplier if LRR is 10%
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20
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10
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5
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50
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Explanation:
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: -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: -Money Multiplier = 1/LRR = 1/20% = 5.
Detailed explanation-4: -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.
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