Higher the Legal Reserve Ratio, greater would be the credit creation in the economy

1.84K viewsDecember 24, 2023Money and Banking True or False

Anurag Pathak30.76K December 24, 2023 0 Comments

True or False with Reasons:

Higher the Legal Reserve Ratio, greater would be the credit creation in the economy.

Anurag Pathak Changed status to publish December 24, 2023

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Anurag Pathak30.76K Posted December 24, 2023 0 Comments

False,

The higher the value of the Legal Reserve Ratio, the lower the value of the money multiplier, and less money is created by the banking system.

Explanation:-

Credit or Money Multiplier is inversely related to LRR.

Credit (Money) Multiplier = 1/LRR

Anurag Pathak Changed status to publish December 24, 2023

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Higher the Legal Reserve Ratio, greater would be the credit creation in the economy

1 Answer

Anurag Pathak

1 Answer

Anurag Pathak

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