Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Money and Banking

Question:

When Cash Reserve Ratio is 20% then with the deposit of Rs 1000, Money creation will be Rs 5000, Money multiplier is :

Options:

0.5

0.05

5

$\frac{1}{5}$

Correct Answer:

5

Explanation:

Money Multiplier = 1/CRR

MM=1/20%

MM=1/0.2=5