Suppose the commercial bank is only expected to keep 25 percent of its deposits as reserves, then with…
With a reserve ratio of 25%, the simple deposit multiplier is \(1/0.25=4\). Total deposits including the initial deposit are \(200\times4=\text{Rs. }800\); additional…
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Suppose the commercial bank is only expected to keep 25 percent of its deposits as reserves, then with primary deposits of ₹ 200, the value of total created deposits will be equal to :
Answer and explanation
Correct answer C
With a reserve ratio of 25%, the simple deposit multiplier is . Total deposits including the initial deposit are ; additional deposits alone would be Rs. 600, assuming no cash leakage or excess reserves.
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RPSC Senior Teacher Grade II