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The value of the deposit multiplier is equal to:
1/CRR
1/SLR
1/LRR
None of the given
- Deposit Multiplier: It's the inverse of the reserve ratio and shows how much banks can expand deposits for each dollar of reserves.
- Option 1: 1/CRR (Cash Reserve Ratio): CRR is the percentage of a bank's total deposits that must be maintained with the central bank. Not directly related to deposit multiplier.
- Option 2: 1/SLR (Statutory Liquidity Ratio): SLR is a requirement for banks to maintain a certain percentage of their net demand and time liabilities in liquid assets. It doesn't determine the deposit multiplier.
- Option 3: 1/LRR (Legal Reserve Ratio): LRR includes both CRR and SLR. It is the relevant factor for the deposit multiplier.
- Option 4: None of the given options are appropriate if considering LRR includes relevant ratios.
By: santosh ProfileResourcesReport error
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