ECONOMICS (CBSE/UGC NET)

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ECONOMICS

MONEY

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
The following is information about the central bank and its description:By acting in this way, the central bank can have tighter control over the ability of banks to lend and create credit; it also makes transfers between banks more efficient.
A
The sole issuer of notes and coins
B
The government’s bank
C
The bankers’ bank
D
Lender of the last resort
Explanation: 

Detailed explanation-1: -Role of the Central Bank: The central bank controls the money and monetary policies of a country.

Detailed explanation-2: -Out of the given options, conduct of monetary policy and lending to the commercial banking system are two common functions of the RBI.

Detailed explanation-3: -It issues loans and advances to the government and does buying and selling of securities on behalf of government. It also advises the government to frame monetary policy of the country to control the credit creation and money market.

Detailed explanation-4: -The central bank is the custodian of the banking reserves of the country. Whenever necessary, it also lends money to other banks by rediscounting bills of exchange and against approved commercial papers. The central bank is the lender of the last resort because the money supply of the country is under its control.

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