Neco Model Questions Vol1 2018 Economics Question 34

Practice objective / multiple choice question 34 from the 2018 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2018 Economics Objective / Multiple Choice Medium Difficulty
Question 34 NECO_MODEL_QUESTIONS_VOL1 • 2018 • ECONOMICS • objective

The banking system in Country C operates with a required reserve ratio of 10 %, an excess‑reserve ratio of 5 % of deposits, and the public holds cash equal to 20 % of bank deposits (currency‑deposit ratio = 0.2). If the central bank injects ₦100 million of new reserves into the banking system, calculate the resulting change in the total money supply.

Answer Options

A. Approximately ₦285.71 million increase in the money supply
B. Approximately ₦371.43 million increase in the money supply
C. Approximately ₦320.00 million increase in the money supply
Correct Answer D. Approximately ₦342.86 million increase in the money supply
Correct Answer
D
Correct Option:
Approximately ₦342.86 million increase in the money supply

About This Question

This is Neco Model Questions Vol1 2018 Economics Question 34. It is one of the objective questions from the 2018 Neco Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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