Macro

Money & Banking

Easy

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

0.5

0.05

1/5

✅ Correct Option: 3

Money Multiplier = $\frac{1}{\text{CRR}} = \frac{1}{0.20} = 5$ . This can also be verified as $\frac{\text{Total Money Created}}{\text{Initial Deposit}} = \frac{5000}{1000} = 5$ .

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High powered money comprises of :

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What was the immediate impact of demonetization on the economy?

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Which of the following is not true about a commercial Bank?

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RBI can influence money supply by changing the Bank rate. An increase in Bank rate can be termed as :

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Match List-I with List-II

List-I	List-II
(A) Fixed period to maturity.	(I) Intrinsic Value
(B) Currency notes and coins.	(II) M3
(C) Gold or silver coin.	(III) Time Deposits
(D) Aggregate monetary resources.	(IV) Fiat Money

Choose the correct answer from the options given below:

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Which are the following statements are true:

(A) Open Market Operations refers to buying and selling of bonds issued by the Government in the open market.

(B) Currency notes and coins are called fiat money.

(D) M1 and M2 are known as narrow money.

Choose the correct answer from the options given below:

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

Solution

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