Gce Model Questions Vol1 2022 Economics Question 26
Practice objective / multiple choice question 26 from the 2022 Gce Model Questions Vol1 Economics examination.
The economy initially has total deposits of \(\,\text{₦}500\) million and the public holds \(\,\text{₦}150\) million as currency. The required reserve ratio is \(10\%\) and banks hold no excess reserves. The central bank reduces the required reserve ratio to \(8\%\) and banks decide to hold excess reserves equal to \(5\%\) of deposits. The public keeps the same currency‑to‑deposit ratio as before. Assuming the monetary base (currency plus total reserves) remains unchanged, calculate the new total money supply (deposits plus currency) after these changes. Give your answer in millions of naira, rounded to one decimal place.
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About This Question
This is Gce Model Questions Vol1 2022 Economics Question 26. It is one of the objective questions from the 2022 Gce Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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