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

Sandeep Garg Class 12 Macroeconomics Solutions Chapter 6 Banking: Commercial Banks and The Central Bank is explained by the expert Economic teachers from the latest edition of Sandeep Garg Macroeconomic Class 12 textbook solutions. We at BYJU’S provide Sandeep Garg economics class 12 Solutions to give comprehensive insight about the subject to the students. These insights help as a priceless benefit to students while completing their homework or while studying for their exams. There are numerous concepts in economics, but here we provide you the solution from Banking: Commercial Banks and The Central Bank, which will be useful for the students to score well in the board exams.

Sandeep Garg Solutions Class 12 – Chapter 6 – Part B

Question 1

Distinguish between cash reserve ratio and statutory ratio.

Ans: Cash reserve ratio refers to the minimum percentage of net demand and time liabilities, to be kept by commercial banks with the central bank. On the other hand, statutory liquidity ratio refers to a minimum percentage of net demand and time liabilities in the form of designated liquid assets which commercial banks are required to maintain with themselves.

Question 2

What is meant by margin requirement?

Ans: The difference between the market value of security offered and the value of amount lent is called a margin requirement.

Question 3

Mention any one-factor affecting credit creation by banks.

Ans: Initial Cash Deposits

Question 4

What is a central bank?

Ans: A central bank is an apex body that control, 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?

Ans: The two essential conditions for a financial institute to become a bank are.

  • 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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