If the reserve ratio (R) is 0.10 and there is an increase in the reserves by ₹ 1,000, what will be the change in the money supply?

CA Foundation · Business Economics · PYQS · September 2024
If the reserve ratio (R) is 0.10 and there is an increase in the reserves by ₹ 1,000, what will be the change in the money supply?
(A) A. ₹ 1,000
(B) B. ₹ 10,000
(C) C. ₹ 100
(D) D. ₹ 10

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. ₹ 10,000

Topics: Theory of Demand and Supply, Money Market

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