JAMB Commerce 2025 Objective — Question 37

Question 37 of 40 from the Joint Admissions and Matriculation Board (JAMB) Commerce 2025 Objective paper, with the correct answer and a full explanation.

Increase in cash reserve ratio (CRR) by the CBN will result in:

A. Initially increase the supply but later on decrease automatically
B. No impact on the supply of money in the economy
C. Decrease the supply of money in the economyCorrect
D. Increase the supply of money in the economy

Explanation

When the CBN increases the CRR, commercial banks will not have enough cash to give out as loans, which reduces their ability to create credit, decreasing the money supply.

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