Neco 2017 Economics Question 14
Practice objective / multiple choice question 14 from the 2017 Neco Economics examination.
Initially, bank deposits total \(2000\) billion naira. The public holds currency equal to 25% of deposits, the required reserve ratio is 8%, and banks keep excess reserves equal to 1% of deposits. The central bank reduces the required reserve ratio to 5% while the other ratios stay unchanged. Assuming the monetary base remains the same, calculate the new total money supply and the increase in money supply (in billions of naira).
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About This Question
This is Neco 2017 Economics Question 14. It is one of the objective questions from the 2017 Neco Economics examination.
Difficulty level: Medium .
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