Money and banking

If LRR is 20% the money multiplier is

• 2

• 4

• 5

• 10

Credit Creation by commercial bank is based on

• Net demand deposits

• Primary deposits

• Loans

• Foreign reserves

What does the term "credit creation" by commercial banks refer to?

• Printing of currency notes by banks

• Lending more money than the cash held by banks

• Accepting deposits from customers

• Purchasing government bonds

If the Legal Reserve Ratio (LRR) is 10%, what is the money multiplier?

• 1

• 5

• 10

• 20

If the Legal Reserve Ratio (LRR) increases, what happens to the Money Multiplier, assuming all other factors remain constant?

• It increases

• It remains the same

• It decreases

• It becomes zero