Waec Model Questions Vol1 2017 Economics Question 2
Practice objective / multiple choice question 2 from the 2017 Waec Model Questions Vol1 Economics examination.
The public holds currency equal to 25 % of the amount of deposits (c = 0.25). The central bank initially requires banks to hold 12 % of deposits as required reserves (r₁ = 0.12). If the central bank injects ₦20 billion of high‑powered money into the banking system, compute the resulting money supply. Afterwards the reserve requirement is reduced to 8 % (r₂ = 0.08) while the currency‑to‑deposit ratio remains unchanged. What is the increase in the money supply after the change in the reserve requirement?
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About This Question
This is Waec Model Questions Vol1 2017 Economics Question 2. It is one of the objective questions from the 2017 Waec Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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