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If the required reserve ratio is 20 percent and commercial bankers decide to hold additional excess reserves e?

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  • If the required reserve ratio is 20 percent and commercial bankers decide to hold additional excess reserves e?


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Answer #1 | 23/12 2013 01:23
1. The question is not clear. 2. If the commercial bankers decide to hold additional excess reserves, their capacity to create deposit money and credit will be further be curtailed, affecting growth of economy. 3. The multiplier effect will worsen the situation. ----------------- Money Multiplier: http://en.wikipedia.org/wiki/Money_multiplier . .

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