Sandeep Garg Macroeconomics Class 12- Chapter 6 Banking: Commercial Banks and The Central Bank

Sandeep Garg Class 12 Macroeconomics solutions for Chapter 6 Banking: Commercial Banks and the Central Bank are explained by the expert economics teachers from the latest edition of Sandeep Garg Macroeconomics Class 12 textbook solutions. At BYJU’S, we provide Sandeep Garg economics class 12 solutions to give a comprehensive insight about the subject to the students.

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Sandeep Garg Solutions Class 12 – Chapter 6 – Part B

Question 1

Distinguish between cash reserve ratio and statutory ratio.

Answer:

Cash reserve ratio or CRR is the amount or portion of money that banks need to keep as cash for paying the customers in case there is a requirement. On the other hand, statutory liquid ratio or SLR refers to the ratio of liquid assets to the net demand and time liabilities also known as NDTL.

Question 2

What is meant by margin requirement?

Answer:

The difference between the market value of security offered and the value of the amount lent is known as a margin requirement.

Question 3

Mention any one factor affecting the credit creation by banks.

Answer:

Initial cash deposits

Question 4

What is a central bank?

Answer:

A central bank is an apex body that controls, operates, regulates, and directs the entire banking and monetary structure of the country.

Explore link: National Income and Related Aggregate Solutions

Question 5

What are the two essential conditions for a financial institute to become a bank?

Answer:

The following are the two essential conditions for a financial institute to become a bank .

•       Accepting of deposits
•       Advancing of loans

Question 6

What do you mean by ‘bank of issue’?

Answer:

Bank of issue means a bank that has the legal right to issue currency notes.

• Accepting deposits
• Advancing of loans

Question 6

What do you mean by ‘bank of issue’?

Ans: Bank of issue means a bank which has the legal right to issue currency notes.

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