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Question
Read the following statements carefully and choose the correct alternatives given below:
Statement 1 - The value of the money multiplier is determined by the reserve ratio prevailing in the monetary system.
Statement 2 - The process of credit creation directly relates to the value of the reserve ratio.
Options
Both the statements are true.
Both the statements are false.
Statement 1 is true and Statement 2 is false.
Statement 2 is true and Statement 1 is false.
MCQ
Solution
Statement 1 is true and Statement 2 is false.
shaalaa.com
Money Creation by Banking System - Limits to Credit Creation and Money Multiplier
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