Currency Deposit Ratio - Meaning, Importance and Calculation
Currency Deposit Ratio - Meaning, Importance and Calculation
Last updated at Dec. 13, 2024 by Teachoo
Chapter 3 Part 2 - Banking
Difference between Central bank and Commercial Bank
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Economics Class 12
Macroeconomics
- Chapter 1 Macro - Introduction
- Chapter 2 National Income Accounting - Basic Concepts
- Chapter 2 National Income - Part 2 Concept of GDP and GNP
- Chapter 2 National Income - Part 3 Value Added Method
- Chapter 2 National Income - Part 4 Income Method
- Chapter 2 National Income - Part 5 Expenditure Method
- Chapter 2 National Income - Part 6 Summary of Different Methods
- Chapter 3 Part 1 - Money
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Chapter 3 Part 2 - Banking
- Chapter 4 Part 1 - AD,AS and Related Concepts
- Chapter 4 Part 2 - Income Determination and Multiplier
- Chapter 4 Part 3 - Excess Demand and Excess Supply
- Chapter 5 - Government Budget
- Chapter 6 Part 1 - Foreign Exchange Rates
- Chapter 6 Part 2 - Balance of Payment
Transcript
What is Currency Deposit Ratio It is the Ratio of Money held by Public in Currency to Money held by Public in Deposits Currency Deposit Ratio = Money held by Public in currency Money held by Public in Deposits Example Suppose a person earns Rs 100000 Salary in Cash He spends Rs 80000 in cash He deposits balance Rs 20000 in his bank account In this case Currency Deposit Ratio = Money held by Public in Deposits Money held by Public in currency Important Points About CDR CDR Reverse Calculation If a person earns Rs 10000 CDR = 4 Amount deposited in bank = 1/(1+CDR) = 1/(1+4) = 1/ 5 =0.2= 20% Amount kept as cash = CDR/(1+CDR) = 4/(1+4) = 4/ 5 =0.8 =80% Does CDR always Remain Same No, it keeps on fluctuating Example It increases during Festive Season (as people spend more)
