Practice - Supply of Money
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Practice Questions
Test your understanding with targeted questions
What are the two main components of the money supply?
💡 Hint: Think about what money consists of in everyday transactions.
What is the role of a central bank?
💡 Hint: What institution is responsible for managing the monetary system?
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the primary role of a central bank?
💡 Hint: Think about who manages the money supply.
True or False: Commercial banks can create more money than what they hold in reserves.
💡 Hint: Remember the concept of the money multiplier.
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Challenge Problems
Push your limits with advanced challenges
Assume a bank has total deposits of Rs 1,000 and a CRR of 10%. Calculate the total money that can be created using the money multiplier.
💡 Hint: Apply the money multiplier formula.
Discuss how increasing reserve requirements would affect loan availability in banks and the overall economy.
💡 Hint: Think about the relationship between reserves and lending capacity.
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Reference links
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