A-LevelEconomicsMoney and BankingOct/Nov 2019Paper 3 Q251 Mark
Commercial banks in a country hold $50 million in cash but have created $600 million deposits. The central bank raises the cash deposit ratio to 10%. What will be the outcome? A Commercial banks will decrease deposits to $500 million. B Commercial banks will deposit $5 million in the central bank. C Commercial banks will deposit $10 million in the central bank. D Commercial banks will increase money in circulation by $5 million.
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