Match List-I with List-II.

Suppose initial deposits are of 10,000. Match the total deposits created.

Choose the correct answer from the options given below :

(A)-(III), (B)-(IV), (C)-(I), (D)-(II)

The correct answer is option (3) : (A)-(III), (B)-(IV), (C)-(I), (D)-(II)

The Cash Reserve Ratio (CRR) is the percentage of a bank's total deposit that it is required to keep with the central bank (in this case, the Reserve Bank of India) as a reserve. The total deposits that a  bank can create in the economy are determined  by the reciprocal of (1 - CRR).

Let's calculate the total deposits for each scenario :

(A) CRR = 20%

Total Deposits = $\frac{Initial \, Deposit }{(1-CRR)}$

Total Deposits = $\frac{10,000}{(1-0.20)}$

Total Deposits = $\frac{10,000}{0.80}$

Total Deposits = 50,000

(B) CRR = 40%

Total Deposits = $\frac{Initial \, Deposit}{(1-CRR)}$

Total Deposits = $\frac{10,000}{(1-0.40)}$

Total Deposits = $\frac{10,000}{0.60}$

Total Deposits = 25,000

(C) CRR = 50%

Total Deposits = $\frac{Initial \, Deposit}{(1-CRR)}$

Total Deposits = $\frac{10,000}{(1-0.50)}$

Total Deposits = $\frac{10,000}{0.50}$

Total Deposits = 20,000

(C) CRR = 60%

Total Deposits = $\frac{Initial \, Deposit}{(1-CRR)}$

Total Deposits = $\frac{10,000}{(1-0.60)}$

Total Deposits = $\frac{10,000}{0.40}$

Total Deposits = 16,667