Waec Model Questions Vol1 2021 Economics Question 49

Practice objective / multiple choice question 49 from the 2021 Waec Model Questions Vol1 Economics examination.

Waec Model Questions Vol1 2021 Economics Objective / Multiple Choice Medium Difficulty
Question 49 WAEC_MODEL_QUESTIONS_VOL1 • 2021 • ECONOMICS • objective

The reserve requirement ratio is 10 % and the public holds cash equal to 20 % of bank deposits. (a) Compute the money multiplier. (b) If the central bank purchases government securities worth ₦5 million, what is the maximum possible increase in the money supply?

Answer Options

Correct Answer A. (a) Money multiplier = 4; (b) Maximum increase = ₦20 million
B. (a) Money multiplier = 3; (b) Maximum increase = ₦15 million
C. (a) Money multiplier = 2.5; (b) Maximum increase = ₦12.5 million
D. (a) Money multiplier = 5; (b) Maximum increase = ₦25 million
Correct Answer
A
Correct Option:
(a) Money multiplier = 4; (b) Maximum increase = ₦20 million

About This Question

This is Waec Model Questions Vol1 2021 Economics Question 49. It is one of the objective questions from the 2021 Waec Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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