Question:
If the total credit created by the banks is ₹ 500 and Reserve Ratio is 20\%, the value of primary deposits would be ________ .
If the total credit created by the banks is ₹ 500 and Reserve Ratio is 20\%, the value of primary deposits would be ________ .
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To find primary deposits, multiply total credit by the reserve ratio (or use the formula: Primary Deposits = Total Credit $\times$ Reserve Ratio).
Updated On: Jul 1, 2025
- ₹200
- ₹300
- ₹100
- ₹500
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The Correct Option is C
Solution and Explanation
\[\text{The formula for total credit is: } \text{Total Credit} = \frac{\text{Primary Deposits}}{\text{Reserve Ratio}}.\]
\text{Substitute the values:}
\[500 = \frac{X}{0.20}, \quad \text{where X is the primary deposits.}\] \text{Solving for X:}
\[X = 500 \times 0.20 = ₹ 100.\]
\[500 = \frac{X}{0.20}, \quad \text{where X is the primary deposits.}\] \text{Solving for X:}
\[X = 500 \times 0.20 = ₹ 100.\]
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