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1. explian the process of money creation by commercial bank with the help of numerical example

2. how does a central bank influence credit creation by commercial baks through open market operation ? explain

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For the first part, refer to the link: https://www.meritnation.com/ask-answer/question/market-for-a-good-is-in-equilibrium-there-is-increase-in/market-equilibrium/6052435
For the second part, refer to the link: https://www.meritnation.com/cbse/class12-commerce/ncert-solutions/economics/introductory-macroeconomics/money-and-banking/page46-exercise-qno12/341_1988_12869/what-arethe-instruments-of-monetary-policy-of-rbi-how

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already included at our websites . go through the study material . any problem do get back to me .

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RBI sells the government securities to commercial banks and public. (As all the transactions are carried out through banks so here wek take in consideration only the commercial baks and not the public).

As these securities are sold to banks by RBI, the liquid reserves of that bank are reduced by the amount of securities. This reduces the capability of banks to lend money as loan and thus there's a reduction in the credit creation.

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shivi : m not a paid member..so i cant view the study material..

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it's too long 2 explain shilpa

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