Suppose all banks maintain a 100 percent reserve ratio. If an individual deposits Rs 1,000 of currency in a bank ?

A. the money supply increases by more than Rs 1,000
B. the money supply increase by less than Rs 1,000
C. the money supply decrease by less than Rs 1,000
D. the money supply decrease by more than Rs 1,000
E. The money supply is unaffected

Correct Answer: The money supply is unaffected ✔

Last Updated: June 18, 2019