Assertion (A): Credit Creation comes to an end when total cash reserves become equal to the initial deposit.
Assertion (A): Credit Creation comes to an end when total cash reserves become equal to the initial deposit.
Reason (R): The value of money multiplier is determined by Legal Reserve Ratio (LRR).
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is True but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is True
Anurag Pathak Changed status to publish January 5, 2024
Ans – (b)
Explanation:-
Assertion (A) is correct as credit creation comes to an end when total cash reserves become equal to the initial deposit.
Reason (R) is alos correct as money multiplier is determined by LRR.
But Reason (R) does not explain explicitly the Assertion (A).
Anurag Pathak Changed status to publish January 5, 2024
