Neco 2017 Economics Question 42
Practice objective / multiple choice question 42 from the 2017 Neco Economics examination.
Suppose the public holds a currency‑deposit ratio of \( c = 0.30 \) and banks keep an excess‑reserve ratio of \( e = 0.02 \). Initially the required reserve ratio is \( r = 0.10 \). The banking system has total deposits of \( D = 500 \) million naira. If the central bank reduces the required reserve ratio to \( r' = 0.08 \) while the currency‑deposit and excess‑reserve ratios remain unchanged, what is the increase in the overall money supply?
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About This Question
This is Neco 2017 Economics Question 42. It is one of the objective questions from the 2017 Neco Economics examination.
Difficulty level: Medium .
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