12th Class Economics Money And Banking Question Bank MCQs - Money and Banking

  • question_answer
    What will be the total amount of money created in the system if legal reserves ratio is 20% and primary deposits are Rs. 1,000?

    A) Rs. 1,000

    B) Rs. 2,000

    C) Rs. 3,000

    D) Rs. 5,000

    Correct Answer: D

    Solution :

    Money Created = Primary Deposits \[\times \] Money Multiplier = 1,000 \[\times \] (1/0.20) = 1,000 \[\times \] 5 = Rs. 5,000


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