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QUESTION 4 (a) The following is the balance sheet of Zuhal Bank: Asset (RM million) Liability (RM million) Cash reserves 10 000 Current deposit 50

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QUESTION 4 (a) The following is the balance sheet of Zuhal Bank: Asset (RM million) Liability (RM million) Cash reserves 10 000 Current deposit 50 000 Loans 40 000 Total 50 000 Total 50 000 (i) If all the excess reserves lent, calculate the value of statutory reserve ratio. (3 marks) (ii) Calculate the total of loan amount after three stages of the credit creation process. (6 marks) (b) State your argument on the action of government in reducing statutory reserve ratio during inflation. (6 marks)

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