If Cash Reserve Ratio is 20%, what will

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Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Money and Banking

Question:

If Cash Reserve Ratio is 20%, what will be the value of money multiplier ?

Options:

0.2

Correct Answer:

Explanation:

The correct answer is option (1) : 5

Given that CRR is 20 percent (or 0.20 in decimal form)

MM= 1/CRR

= 1/0.2

= 5