Money multiplier

If the Central banks sets the minimum reserve ratio for private banks at 25%, then the money multiplier is:

• 4

• 2.5

• 1

• 0

If the central bank increases the minimum reserve ratio that private banks are required to hold, the following will occur:

• The banks can make more loans and the money supply decreases.

• The banks can make more loans and the money supply increases.

• The banks can make fewer loans and the money supply increases.

• The banks can make fewer loans and the money supply decreases.

The RBI can increase the money supply in the market by:

• selling government securities

• buying government securities

• borrowing money from commercial banks

• none of the above

Calculate the value of money multiplier if the initial amount is ₹. 700 crores and RR is 10%.

• 10

• 1

• 0

• 4

One drawback of barter exchange is,

• Lack of trust

• Lack of coincidence of wants

• Lack of double coincidence of wants

• Lack of goods

Of the four players in the money supply process, most observers agree that the most important player is

• depositors

• borrowers

• RBI

• Banks

If the required reserve ratio is 15 percent, the simple deposit multiplier is approximately

• 6.67

• 15.0

• 3.33

• 1.5

For a given level of the monetary base, an increase in the required reserve ratio on checkable deposits will mean

• an increase in the money supply

• a decrease in the money supply

• an increase in checkable deposits

• an increase in discount borrowing

For a given level of the monetary base, an increase in the required reserve ratio on checkable deposits causes the money multiplier to _____ and the money supply to _____

• decrease; increase

• decrease; decrease

• increase; increase

• increase; increase