Suppose in an economy, the initial deposit of ₹ 400 crores lead to the creation of total deposits worth ₹ 4000 crore. Then the value of reserve requirements would be ______.

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Suppose in an economy, the initial deposit of ₹ 400 crores lead to the creation of total deposits worth ₹ 4000 crore. Then the value of reserve requirements would be 0.1. Explanation: Money Multiplier = 1/"Reserve Ratio" Also, Money Multiplier = `"Total Deposits"/"Initial Deposit"` Given: Initial deposit = ₹400 crores Total deposits = ₹4000 crores Step 1: Calculate the Money Multiplier Money Multiplier = $\frac{4000}{400}$ = 10 Step 2: Calculate the Reserve Requirement (Reserve Ratio) Reserve Ratio = `1/"Money Multiplier" = $\frac{1}{10}$ = 0.1`

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