An initial deposit of Rs 5,000 results in a multiple expansion of credit to Rs 100000,what is the value of money multiplier:(a).2 (b). 8 (C). 10 (d). 20

1. Break Down the Problem

We need to calculate the money multiplier based on the initial deposit and the total credit expansion. The money multiplier (m) can be calculated using the formula:

$m = \frac{\text{Total Credit Expansion}}{\text{Initial Deposit}}$

2. Relevant Concepts

The money multiplier demonstrates how an initial deposit can lead to a greater total increase in bank credit, thereby influencing the money supply in the economy.

3. Analysis and Detail

Given:

• Initial Deposit = Rs 5,000
• Total Credit Expansion = Rs 100,000

Substituting the values into the formula:

$m = \frac{100000}{5000}$

4. Verify and Summarize

Calculating the above expression:

$m = 20$

Therefore, the money multiplier is 20.

Final Answer

The value of the money multiplier is (d) 20.