No products in the cart.

Explain the process of credit creation …

CBSE, JEE, NEET, CUET

CBSE, JEE, NEET, CUET

Question Bank, Mock Tests, Exam Papers

NCERT Solutions, Sample Papers, Notes, Videos

Explain the process of credit creation by bank

Posted by Moly Shukla 4 years, 3 months ago

CBSE > Class 12 > Economics

1 answers

Krrish Shridhar 4 years, 3 months ago

1• Commercial banks create credit with the help of money which is deposited by public in banks. 2• Banks have to keep a certain amount of deposits with themselves as liquid assets out of initial deposits. 3• This amount is calculated using LRR which is decided by central bank. 4• The extra money (money except liquid assets) is uses by banks to give loans and they charge a certain amount of interest. 5• The total credit created is far access of initial deposits. NUMERICAL EXAMPLE:- let initial deposits= 2000 & LRR= 10% SOLUTION:- Money Multiplier=1/LRR= 1/10% = 100/10 =10times Therefore, total deposits became 20000 that is 10times of initial deposits (2000)

ANSWER

https://examin8.com

Test

Related Questions

why should the aggregate final expenditure of an economy be equal to the aggregate factor payment

Posted by Nandita Sharma 1 year, 5 months ago

CBSE > Class 12 > Economics

1 answers

Industrial licensing was used to promote regional equality. Discuss

Posted by Niyati Garg 1 year, 3 months ago

CBSE > Class 12 > Economics

0 answers

Is inclusive growth Achievable for a developing country like India when exposed to the process of privatisation and globalization

Posted by Niangmuankim Vaiphei 1 year, 4 months ago

CBSE > Class 12 > Economics

0 answers

What is deficit ?

Posted by Sakshi Singh 4 months, 1 week ago

CBSE > Class 12 > Economics

1 answers

Two types of marke diagram and explanation

Posted by Rijum Karlo 1 year, 4 months ago

CBSE > Class 12 > Economics

0 answers

What is receipt?

Posted by Geeta Gautam 1 year, 4 months ago

CBSE > Class 12 > Economics

0 answers

Trends in credit availability

Posted by Shruti Singh 1 year, 4 months ago

CBSE > Class 12 > Economics

0 answers

Economic Reforms Since 1991 notes

Posted by Dipika Sharma 1 year, 4 months ago

CBSE > Class 12 > Economics

0 answers

Economics project on function of RBI

Posted by Mehar Ansari 1 year, 4 months ago

CBSE > Class 12 > Economics

0 answers

Explain the limitation of GDP as wellfare

Posted by Naman Jain 1 year, 4 months ago

CBSE > Class 12 > Economics

1 answers

myCBSEguide App

myCBSEguide

Trusted by 1 Crore+ Students

Test Generator

Test Generator

Create papers online. It's FREE.

CUET Mock Tests

CUET Mock Tests

75,000+ questions to practice only on myCBSEguide app

Google Play

Download myCBSEguide App