Match List-I with List-II.
Suppose initial deposits are of 10,000. Match the total deposits created.
| List-I | List-II | ||
| (A) | CRR = 20% | (I) | Total deposits = 20,000 |
| (B) | CRR = 40% | (II) | Total deposits = 16,667 |
| (C) | CRR = 50% | (III) | Total deposits = 50,000 |
| (D) | CRR = 60% | (IV) | Total deposits = 25,000 |
Choose the correct answer from the options given below :
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A)-(III), (B)-(IV), (C)-(I), (D)-(II)
A bank keeps a part of each deposit in reserve, as the cash reserve ratio (CRR) requires, and lends the rest. The loans come back as new deposits. This goes on until the reserves equal the CRR share of total deposits:
\( \displaystyle \text{Total deposits} = \frac{\text{Initial deposit}}{\text{CRR}} \)
| List-I | List-II | Reason |
|---|---|---|
| (A) CRR = 20% | (III) Total deposits = 50,000 | \( \displaystyle \frac{10000}{0.2} = 50000 \) |
| (B) CRR = 40% | (IV) Total deposits = 25,000 | \( \displaystyle \frac{10000}{0.4} = 25000 \) |
| (C) CRR = 50% | (I) Total deposits = 20,000 | \( \displaystyle \frac{10000}{0.5} = 20000 \) |
| (D) CRR = 60% | (II) Total deposits = 16,667 | \( \displaystyle \frac{10000}{0.6} = 16667 \), rounded |
NCERT (2026-27): Introductory Macroeconomics — Chapter 3: Money and Banking
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