Which of the following is the correct formula for "Money multiplier"?
Answer & explanation
Correct answer: option 3
In the above question, SLR refers to "Statutory Liquidity Ratio", MSF refers to "Marginal Standing facility", CRR refers to "Cash Reserve Ratio" and BR refers to "Bank Rate".
Money multiplier refers to creating money in the economy in the form of credit creation.
The correct formula for "Money multiplier" is:
Money multiplier = \(\frac{1}{CRR }\)