A-LevelEconomicsThe macroeconomy9708/33 · Oct/Nov 2019 · 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.

(a)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.[1]

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

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Topic: The macroeconomy, A-Level Economics (syllabus 9708). Structured question, 1 mark.
Source: A-Level Economics, Oct/Nov 2019 Paper 3 Variant 3, question 25.

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