Re: JNU 2006-2002 Doubts

Posted by phelps.phan on May 08, 2014; 12:09pm
URL: http://discussion-forum.276.s1.nabble.com/JNU-2006-2002-Doubts-tp7588757p7588998.html

Pls can someone explain how the change in money supply is calculated for this qn by Anjali. Thanks

A person takes Rs 100 of currency notes and puts them into a demand deposit in a bank. The bank keeps Rs 10 of this amount and lends out Rs 90 . As a result of these transactions , money supply in the economy is
 Reduce by 10
Unchanged
Increase by 90
Increase by 190