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Suppose the primary deposit of banks is ₹ 10,000 and the cash reserve ratio of Central Bank is 10%,…

In the simplified model assumed here, the non-lendable fraction is \(0.10+0.25+0.05=0.40\). Hence total deposits are \(10,000/0.40=\text{Rs. }25,000\); this treats all three…

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Suppose the primary deposit of banks is ₹ 10,000 and the cash reserve ratio of Central Bank is 10%, statutory liquidity ratio is 25% and the unutilised ratio of deposits with banks is 5%, then the total deposits will be -

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Correct answer D

In the simplified model assumed here, the non-lendable fraction is 0.10+0.25+0.05=0.400.10+0.25+0.05=0.40. Hence total deposits are 10,000/0.40=Rs. 25,00010,000/0.40=\text{Rs. }25,000; this treats all three ratios as separate leakages and ignores cash withdrawals or further bank adjustments.

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