If the Cash Reserve Ratio (CRR) is increased by the RBI, its impact on the expansion of credit creation will be to__:
If the Cash Reserve Ratio (CRR) is increased by the RBI, its impact on the expansion of credit creation will be to__:
[A]decrease it
[B]increase it
[C]no impact
[D]Cant’ say
decrease it
If the Cash Reserve Ratio (CRR) is increased by the RBI, its impact on the expansion of credit creation will be to decrease it. In short, credit creation is the reciprocal of the CRR.