Neco 2021 Economics Question 31
Practice objective / multiple choice question 31 from the 2021 Neco Economics examination.
The reserve requirement ratio is \(10\%\). Commercial banks currently hold total deposits of \(\text{₦}500\) million and excess reserves of \(\text{₦}20\) million. The Central Bank purchases government securities worth \(\text{₦}50\) million, crediting the banks' reserve accounts. After the purchase, banks decide to keep \(5\%\) of their total reserves as excess reserves. Assuming banks lend out the rest, calculate the increase in the money supply (in million Naira).
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About This Question
This is Neco 2021 Economics Question 31. It is one of the objective questions from the 2021 Neco Economics examination.
Difficulty level: Medium .
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