Question Tag: Money Multiplier Principle

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EIB – APR 2024 – L1 – Q6 – Sources of Deposits, Exchange Rate Influence, Money Multiplier, Functions of Commercial Banks

This question covers sources of bank deposits, ways exchange rates affect bank profitability, calculation of money creation using the money multiplier, and major functions of commercial banks in the economy.

(a) Identify four (4) sources of deposits for Commercial Banks. [4 marks]

(b) Managing Exchange Rate Risk effectively is essential for banks to preserve profitability and maintain financial stability in a dynamic Global Financial Environment. Mention four (4) ways by which Exchange Rates can influence the profitability of banks. [8 marks]

(c) A bank initially received a deposit of GHC150.00. Using the Money Multiplier Principle, determine the total amount of money that can be created from this initial deposit, assuming a reserve ratio of 5%. [4 marks]

(d) Mention four (4) major functions of Commercial Banks in your economy. [4 marks]

(Total: 20 marks)

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EIB – APR 2024 – L1 – Q6 – Sources of Deposits, Exchange Rate Influence, Money Multiplier, Functions of Commercial Banks

This question covers sources of bank deposits, ways exchange rates affect bank profitability, calculation of money creation using the money multiplier, and major functions of commercial banks in the economy.

(a) Identify four (4) sources of deposits for Commercial Banks. [4 marks]

(b) Managing Exchange Rate Risk effectively is essential for banks to preserve profitability and maintain financial stability in a dynamic Global Financial Environment. Mention four (4) ways by which Exchange Rates can influence the profitability of banks. [8 marks]

(c) A bank initially received a deposit of GHC150.00. Using the Money Multiplier Principle, determine the total amount of money that can be created from this initial deposit, assuming a reserve ratio of 5%. [4 marks]

(d) Mention four (4) major functions of Commercial Banks in your economy. [4 marks]

(Total: 20 marks)

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You're reporting an error for "EIB – APR 2024 – L1 – Q6 – Sources of Deposits, Exchange Rate Influence, Money Multiplier, Functions of Commercial Banks"

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