Neco Model Questions Vol1 2019 Economics Question 22

Practice objective / multiple choice question 22 from the 2019 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2019 Economics Objective / Multiple Choice Medium Difficulty
Question 22 NECO_MODEL_QUESTIONS_VOL1 • 2019 • ECONOMICS • objective

During an open‑market operation the Central Bank purchases government bonds worth ₦500 million, injecting that amount into the banking system. The required reserve ratio is 10 %, the public holds a currency‑to‑deposit ratio of 0.25, and banks keep excess reserves equal to 2 % of deposits. Calculate the total increase in the money supply (in million naira) that results from this operation.

Answer Options

Correct Answer A. Approximately ₦1,689 million (≈ ₦1.69 billion)
B. Approximately ₦1,250 million (≈ ₦1.25 billion)
C. Approximately ₦1,500 million (≈ ₦1.5 billion)
D. Approximately ₦2,000 million (≈ ₦2.0 billion)
Correct Answer
A
Correct Option:
Approximately ₦1,689 million (≈ ₦1.69 billion)

About This Question

This is Neco Model Questions Vol1 2019 Economics Question 22. It is one of the objective questions from the 2019 Neco Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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