Neco Model Questions Vol1 2017 Economics Question 23
Practice objective / multiple choice question 23 from the 2017 Neco Model Questions Vol1 Economics examination.
In an economy, total bank deposits are \(\text{₦}200\) billion and currency held by the public is \(\text{₦}80\) billion. The required reserve ratio is \(10\%\) and banks hold excess reserves equal to \(2\%\) of deposits.\n\n(a) Compute the money multiplier and the resulting money supply (M1).\n(b) If the central bank raises the required reserve ratio to \(12\%\) while the proportion of excess reserves to deposits remains unchanged, what is the new money supply?
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About This Question
This is Neco Model Questions Vol1 2017 Economics Question 23. It is one of the objective questions from the 2017 Neco Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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