Suppose the cash reserve ratio is percent, commercial banks keep zero excess reserve, and the cash-to-deposit ratio is percent. To increase the money supply by Rs. crores, the central bank should inject Rs. ________ crores (in integer).
1 markMacroeconomicsMoney supply and the banking multiplierThe monetary base and the money multiplierModerateabout 2 min
IIT JAM 2024 Question 43: Money supply and the banking multiplier
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Suppose the cash reserve ratio is 5 percent, commercial banks keep zero excess reserve, and the cash-to-deposit ratio is 5 percent. To increase the money supply by Rs. 10,500 crores, the central bank should inject Rs. crores (in integer).
Money supply and the banking multiplier has come up 74 times in 7 exams since 2005.
What this question tests
This question is on The monetary base and the money multiplier, part of Money supply and the banking multiplier in Macroeconomics.
How the money supply is built from high-powered money, and what sets the multiplier.
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