Practice The Process of Credit Creation - 4.1 | Chapter 3: Money and Banking | ICSE Class 12 Economics
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Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the reserve requirement?

💡 Hint: Think about how banks manage deposits and withdrawals.

Question 2

Easy

What happens to the excess reserves in a bank?

💡 Hint: Consider the bank's role in the economy.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What percentage must banks keep as reserves?

  • 50%
  • 15%
  • It varies

💡 Hint: Think about the flexibility of different banking systems.

Question 2

True or False: A bank can lend out all of its deposits without retaining any reserves.

  • True
  • False

💡 Hint: Reflect on the regulating rules governing banks.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

Suppose a bank has a reserve requirement of 20%. A customer deposits $1,000. How much can the bank lend out, and what will happen to the money after lending?

💡 Hint: Calculate the reserve first and consider the cycle of spending.

Question 2

Discuss the potential long-term effects on the economy if all banks lowered their reserve requirement to 5%.

💡 Hint: Consider both positive (growth) and negative (inflation risk) outcomes.

Challenge and get performance evaluation