The banking system has £200 million in deposits. The bank liquidity ratio is 20%. The Bank of England wants to increase deposits in the banking system to £400 million. There are no leakages from the banking system. Deposits would increase to £400 million if the liquidity ratio were
A) increased to 25%.
B) reduced to 10%.
C) increased to 40%.
D) reduced to 5%.
Correct Answer:
Verified
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