AshikaKnowledge Contributor
Calculate the LRR if the initial deposit of rupees500 crore leads to the establishment of the total deposit of rupees 4,000 crore.
Calculate the LRR if the initial deposit of rupees500 crore leads to the establishment of the total deposit of rupees 4,000 crore.
Money multiplier = Total deposits/Initial deposits
= 4,000/500 = 8
Thus, money multiplier = 1/LRR
8 = 1/LRR
LRR = 0.125 or 12.5