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What is the currency deposit ratio (cdr)?
- a)ratio of money held in demand drafts to that of money held in treasury bonds
- b)ratio of money held by public in bank deposits to that of money held by public in currency
- c)the total proportion of money that commercial banks lend to the customers
- d)ratio of money held by the public in currency to that of money held in bank deposits
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
What is the currency deposit ratio (cdr)?a)ratio of money held in dema...
Currency Deposit Ratio (CDR) refers to the ratio of money held by the public in currency to that of money held in bank deposits. It is an important indicator of the liquidity position of the economy.
Explanation:
CDR is a measure of the amount of currency that people hold relative to the amount of money they hold in bank deposits. It is calculated by dividing the total amount of currency in circulation by the total amount of bank deposits. CDR is an important indicator of the liquidity position of the economy, as it reflects the willingness of people to hold money in banks versus keeping it in the form of cash.
Factors affecting CDR:
The CDR is influenced by various factors, such as:
1. Interest rates: When interest rates are high, people tend to hold more money in bank deposits, which can lower the CDR.
2. Inflation: High inflation can increase the demand for currency, as people may prefer to hold cash rather than keeping it in bank deposits.
3. Economic conditions: During periods of economic uncertainty, people may prefer to hold more cash as a precautionary measure, which can increase the CDR.
4. Banking regulations: Banking regulations can influence the CDR by affecting people's confidence in the banking system.
Importance of CDR:
The CDR is an important indicator for policymakers, as it can provide insights into the liquidity position of the economy. A high CDR may indicate low levels of confidence in the banking system, while a low CDR may indicate a healthy level of liquidity.
Conclusion:
The CDR is an important indicator of the liquidity position of the economy. It reflects the willingness of people to hold money in banks versus keeping it in the form of cash. Factors such as interest rates, inflation, economic conditions, and banking regulations can influence the CDR. Policymakers can use the CDR to monitor the liquidity position of the economy and take appropriate measures to ensure its stability.
Explanation:
CDR is a measure of the amount of currency that people hold relative to the amount of money they hold in bank deposits. It is calculated by dividing the total amount of currency in circulation by the total amount of bank deposits. CDR is an important indicator of the liquidity position of the economy, as it reflects the willingness of people to hold money in banks versus keeping it in the form of cash.
Factors affecting CDR:
The CDR is influenced by various factors, such as:
1. Interest rates: When interest rates are high, people tend to hold more money in bank deposits, which can lower the CDR.
2. Inflation: High inflation can increase the demand for currency, as people may prefer to hold cash rather than keeping it in bank deposits.
3. Economic conditions: During periods of economic uncertainty, people may prefer to hold more cash as a precautionary measure, which can increase the CDR.
4. Banking regulations: Banking regulations can influence the CDR by affecting people's confidence in the banking system.
Importance of CDR:
The CDR is an important indicator for policymakers, as it can provide insights into the liquidity position of the economy. A high CDR may indicate low levels of confidence in the banking system, while a low CDR may indicate a healthy level of liquidity.
Conclusion:
The CDR is an important indicator of the liquidity position of the economy. It reflects the willingness of people to hold money in banks versus keeping it in the form of cash. Factors such as interest rates, inflation, economic conditions, and banking regulations can influence the CDR. Policymakers can use the CDR to monitor the liquidity position of the economy and take appropriate measures to ensure its stability.
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What is the currency deposit ratio (cdr)?a)ratio of money held in dema...
(Correct Answer:- D)
Definition: The currency deposit ratio shows the amount of currency that people hold as a proportion of aggregate deposits.
Description: An increase in cash deposit ratio leads to a decrease in money multiplier. An increase in deposit rates will induce depositors to deposit more, thereby leading to a decrease in Cash to Aggregate Deposit ratio. This will in turn lead to a rise in Money Multiplier.
Definition: The currency deposit ratio shows the amount of currency that people hold as a proportion of aggregate deposits.
Description: An increase in cash deposit ratio leads to a decrease in money multiplier. An increase in deposit rates will induce depositors to deposit more, thereby leading to a decrease in Cash to Aggregate Deposit ratio. This will in turn lead to a rise in Money Multiplier.
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What is the currency deposit ratio (cdr)?a)ratio of money held in demand drafts to that of money held in treasury bondsb)ratio of money held by public in bank deposits to that of money held by public in currencyc)the total proportion of money that commercial banks lend to the customersd)ratio of money held by the public in currency to that of money held in bank depositsCorrect answer is option 'D'. Can you explain this answer?
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What is the currency deposit ratio (cdr)?a)ratio of money held in demand drafts to that of money held in treasury bondsb)ratio of money held by public in bank deposits to that of money held by public in currencyc)the total proportion of money that commercial banks lend to the customersd)ratio of money held by the public in currency to that of money held in bank depositsCorrect answer is option 'D'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about What is the currency deposit ratio (cdr)?a)ratio of money held in demand drafts to that of money held in treasury bondsb)ratio of money held by public in bank deposits to that of money held by public in currencyc)the total proportion of money that commercial banks lend to the customersd)ratio of money held by the public in currency to that of money held in bank depositsCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the currency deposit ratio (cdr)?a)ratio of money held in demand drafts to that of money held in treasury bondsb)ratio of money held by public in bank deposits to that of money held by public in currencyc)the total proportion of money that commercial banks lend to the customersd)ratio of money held by the public in currency to that of money held in bank depositsCorrect answer is option 'D'. Can you explain this answer?.
What is the currency deposit ratio (cdr)?a)ratio of money held in demand drafts to that of money held in treasury bondsb)ratio of money held by public in bank deposits to that of money held by public in currencyc)the total proportion of money that commercial banks lend to the customersd)ratio of money held by the public in currency to that of money held in bank depositsCorrect answer is option 'D'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about What is the currency deposit ratio (cdr)?a)ratio of money held in demand drafts to that of money held in treasury bondsb)ratio of money held by public in bank deposits to that of money held by public in currencyc)the total proportion of money that commercial banks lend to the customersd)ratio of money held by the public in currency to that of money held in bank depositsCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the currency deposit ratio (cdr)?a)ratio of money held in demand drafts to that of money held in treasury bondsb)ratio of money held by public in bank deposits to that of money held by public in currencyc)the total proportion of money that commercial banks lend to the customersd)ratio of money held by the public in currency to that of money held in bank depositsCorrect answer is option 'D'. Can you explain this answer?.
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