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Assume that the required reserve ratio is 0.12 for deposits & there are no excess reserves.
Assume that the total demand for currency is equal to 0.3 times deposits.
a) If total reserves are Rs. 40 billion, what is the level of money supply?
b) By how much does the money supply change if central bank enhances the required reserve ratio to 0.20? Suppose that total reserves are unchanged at Rs. 40 billion.
Q. Describe Nominal and real interest rates? To distinguish real interest rate from the ‘normal' interest rate, latter is termed as the nominal interest rate. Nominal interest
REASONS TO NATIONALISE SARB
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