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Economics (AS & A Level) · Oct / Nov 2021 · Paper 32 · Question 27

9708Money and banking

The bank cash deposit ratio changed from 5% to 10%. What will be the result?

  1. ABank deposits will fall by 10%.
  2. BBanks deposits will rise by 5%.
  3. CThe credit multiplier will fall by 50%.
  4. DThe credit multiplier will increase by 5%.

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Correct answer: C. The credit multiplier will fall by 50%.

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