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Zorluk: KolayCommercial Banks: Functions and Credit Creation

A commercial bank receives an initial cash deposit of ₦50,000. If the central bank specifies a cash reserve ratio of 20%, what is the total amount of deposits created in the banking system?

Cevap: 250000 ₦

Cevap

The total amount of deposits created in the banking system is ₦250,000.
The total amount of deposits created across the commercial banking system is calculated using the formula Total Deposit=Initial DepositCash Reserve Ratio\text{Total Deposit} = \frac{\text{Initial Deposit}}{\text{Cash Reserve Ratio}}. Substituting the given values gives ₦50,0000.20=₦250,000\frac{₦50,000}{0.20} = ₦250,000.

Adım Adım Çözüm

1
Identify the given initial deposit and cash reserve ratio.
Initial Deposit = ₦50,000; Cash Reserve Ratio (CRR) = 20%=0.2020\% = 0.20.
These parameters are required to compute credit expansion.
2
Apply the total credit creation formula.
\text{Total Deposit Expansion} = \frac{\text{Initial Deposit}}{\text{Cash Reserve Ratio}}
The commercial banking system creates secondary deposits equal to the initial primary deposit divided by the cash reserve ratio.
3
Perform the numerical calculation.
\text{Total Deposit Expansion} = \frac{50,000}{0.20} = 250,000
Dividing ₦50,000 by 0.20 yields ₦250,000.

Anahtar Kavram

Credit Creation and Total Deposit Expansion
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Konular

Commercial Banks: Functions and Credit Creation