not sure
The credit multiplier decreases.
CRR MEANS CASH RESERVE RATIO IS A DECLINE IN THE LIQUIDITY OF A ECONOMY THIS IS CREDIT RESERVE RATION IN WHICH A COMMERCIAL BANK HAVE MAINTAIN A PERCANGE OF BALANCE WITH RBI CRR MEANS CASH RESERVE RATIO IS A DECLINE IN THE LIQUIDITY OF A ECONOMY
The variable cash reserve ratio is new method of credit control used by central banks in recent times. The term variable ratio refers to the minimum reserves with the central bank by the commercial banks. As per section 42 (1) of the reserve bank of india, 1934, every scheduled bank has to maintain a minimum cash balance as reserve to be calculated as a percentage on their time and demand liabilities. Variable reserve ratio was used as one of the credit control methods. This methods was suggested by keynes in 1930. This method was first introduced by federal Reserve System of USA in 1935.
By easing the monetary policies. By reducing cash reserve ratio, statutory liquidity ratio and repo rate, the amount of cash in circulation in the economy can be increased. This can help cure credit crunch...
The required reserve ratio is lowered.
Mainly there are three qualitative instruments:1. Open market operations2. Bank rate3. Cash reserve ratio
multiplication
The Required Reserve Ratio is the percentage/fraction of required reserves that should be held for every dollar of deposits in a depository institution that is required by the Federal Reserve.
cash reserve ratio
The current cash reserve ratio (CRR) in India set by the RBI is 5% as on 21st august, 2009.
When the required reserve ratio is lowered, banks can loan out more money.
70%