Determine the total value of loan in an economy, Macroeconomics

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The total value of loan in an economy is Rs. 400 million and the reserve ratio is 20 per cent.

An enhance of Rs. 15 million in the money which the public keeps in commercial banks together with an enhance of the reserve ratio to 25 per cent will increase the total amount of loans by Rs. 50 million.

True or false? Explain.

 


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