If legal reserve ratio decreases from 25% to 20%, Money Multiplier will ____ from ____ to ____
If legal reserve ratio decreases from 25% to 20%, Money Multiplier will ____ from ____ to ____.
(a) Rise, 5, 4
(b) Rise, 4, 5
(c) Fall, 5, 4
(d) Fall, 4, 5
Anurag Pathak Changed status to publish January 5, 2024
Ans – (b)
Solution:-
If LRR is 25%
Money Multiplier = 1/LRR
Money Multiplier = 1/25%
Money Multiplier = 4 times
If LRR is 20%
Money Multiplier = 1/LRR
Money Multiplier = 1/20%
Money Multiplier = 5 times
Money Multiplier rises from 4 to 5 times.
Anurag Pathak Changed status to publish January 5, 2024
