Sunday, March 13, 2016

QUESTIONS ON MONEY CREATION BY COMMERCIAL BANK

Q 1. How does increase in LRR affect the creation of money  by commercial banks?
Q.2. Suppose Central bank increases the rate of Bank Rate, does it effect the money creation by commercial bank? Explain.
Q.3. Suppose Central Bank decided the rate of  LLR is 10 % and if the initial demand deposits with  commercial bank is Rs. 10,000/- .Calculate, how much money or credit creation will be done by Commercial banks.
Q.4. Do you agree that commercial bank' creator of money' in the economy?

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