Money and banking

Indian Economy (CDS)

Title

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Indian Economy - Understanding the basics of Indian economic system

The money multiplier in an economy increases with which one of the following?

Increase in the cash reserve ratio

Increase in the banking habit of the population

Increase in the statutory liquidity ratio

Increase in the population of the country

Explanation:

increase in CRR decrease money multiplier, as it reduces flow of funds back to market•
it increases money multiplier by increasing the velocity of money•
increase in SLR decrease money multiplier, as it reduces flow of funds back to market•
population is not related to money multiplier