Question

1-)The physical cash entails credit relationship between a buyer and a merchant (seller). true or false?

2-)Suppose that there is a major scandal about the credit rating agencies that is likely to undermine the public's confidence in the banking system. Then it is more likely that (i) currency-to-deposit ratio rises and hence (ii) the deposit expansion multiplier increases.true or false?

Answer 1

1). The correct option is ..

True.

As we know that physical cash is that type of cash, which determines the relationship between a buyer and seller. It is opposite to digital cash.

2). The correct option is ..

True

We know that, when there is any scandal about any credit rating agency than it will impact the people's perception about banking system. The people will deposit more money in the economy and multiplier will increase.

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