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IAI's May,2015 exam Q16

Hemant Rupani

Hemant Rupani

Senior Member
IAI's May,2015 Q16

Following is the split of utilization of INR 100 earned in India:
Investment of INR 25
Tax of INR 10
Import of INR 15
Domestic consumption of INR 50
The CRR is 10%. What is the value of Money multiplier?

Edit: I got the answer :)
 
Last edited:
From 100, 15 goes to abroad for import.
So, from those 100, 85 will roll... and then 85×0.85 so on.
If you apply logic of Bank Money Multiplier, you'll see Money Multiplier =1/0.15
 
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