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 -
Answer and explanation
Correct answer D
In the simplified model assumed here, the non-lendable fraction is . Hence total deposits are ; this treats all three ratios as separate leakages and ignores cash withdrawals or further bank adjustments.
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RPSC Senior Teacher (Sanskrit Education)