Neco 2020 Economics Question 35
Practice objective / multiple choice question 35 from the 2020 Neco Economics examination.
Suppose the Central Bank sets the cash reserve ratio (CRR) at 20 % and the statutory liquidity ratio (SLR) at 15 % of deposits. A commercial bank holds deposits of \(\text{₦}500\) million, of which it keeps \(\text{₦}30\) million as excess reserves. The bank lends out all its excess reserves. In addition, the Central Bank purchases \(\text{₦}40\) million of government securities from the public. Assuming no currency leakage, calculate the total increase in the money supply (in Naira) resulting from these actions.
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About This Question
This is Neco 2020 Economics Question 35. It is one of the objective questions from the 2020 Neco Economics examination.
Difficulty level: Medium .
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