Currency Deposit Ratio suggests that if a person gets Re 1, he would deposit Rs(1/1+cdr) in the bank and keeps Rs(cdr/1+cdr)with himself as idle cash balance in study material it is given derivation of this?Plz expert can you help me this through a numerical promblrm?I will be better understand if you post one example(numerical) for that?

Shivang,

Currency Deposit Ratio suggests that if a person gets Rs 500, he would deposit Rs (11 + cdr) in the bank and keeps Rs (cdr1 + cdr) with himself as idle cash balance. 

Suppose, the person gets Rs 500, so the sum of the amount that he deposits in his bank account and the amount that he keeps with himself as idle cash balance should be equal to Rs 500. Suppose he kept Rs 300 in the form of cash(C) and Rs 200 is to be deposited in to the bank(DD).

That is, algebraically,

C + DD =  500         (1)

We know that,

 cdr = CDD
where, C represents currency held by the people in the form of cash.

DD represents Demand Deposits held by the people in the bank.

So, cdr = 1.5

C = cdr. DD
​C = 1.5(200)
C = Rs 300

Substituting the value of C in the equation (1) 

300 + DD = 500

⇒ DD  = Rs 200

DD = (11 + cdr)DD = (5001 + 1.5)DD = Rs 200

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