Waec Model Questions Vol1 2022 Economics Question 8

Practice essay / theory question 8 from the 2022 Waec Model Questions Vol1 Economics examination. This question covers Money and Banking, Money Supply, Reserve Ratio, Monetary Policy .

Waec Model Questions Vol1 2022 Economics Essay / Theory

Topics: Money and Banking Money Supply Reserve Ratio Monetary Policy

Question 8 WAEC_MODEL_QUESTIONS_VOL1 • 2022 • ECONOMICS • essay

The Central Bank of Nigeria (CBN) is reviewing monetary conditions. The following information is current as of June 2022:

Question Parts

( a )

The required reserve ratio for commercial banks is 15 %. Total reserves held by the banking system amount to ₦ 180 billion, while the public holds cash of ₦ 120 billion. Calculate:

( ) Total deposits (in billions of naira).

( ) Money supply (M1) in billions of naira.

( ) Money multiplier (to two decimal places).

( b )

Suppose the CBN raises the required reserve ratio to 20 % while keeping total reserves unchanged. Re‑calculate the total deposits, the money supply (M1) and the money multiplier under the new ratio.

( c )

Analyse the likely impact of the increase in the reserve ratio on inflation and interest rates in the Nigerian economy, linking your discussion to the changes in money supply and multiplier you have computed.

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About This Question

This is Waec Model Questions Vol1 2022 Economics Question 8. It is one of the essay questions from the 2022 Waec Model Questions Vol1 Economics examination.

The question covers Money and Banking, Money Supply, Reserve Ratio, Monetary Policy .

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