Waec Model Questions Vol1 2019 Economics Question 4
Practice objective / multiple choice question 4 from the 2019 Waec Model Questions Vol1 Economics examination.
The central bank sets the required reserve ratio at 10 % and the public holds currency equal to 30 % of their deposits (currency‑deposit ratio = 0.30). The banking system currently has excess reserves of ₦200 million. The central bank conducts an open‑market purchase of government securities worth ₦500 million. Assuming banks lend out all excess reserves and the public does not change its currency‑deposit ratio, calculate the total increase in the money supply (M2) after the purchase.
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About This Question
This is Waec Model Questions Vol1 2019 Economics Question 4. It is one of the objective questions from the 2019 Waec Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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