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High-Powered Money and Money Creation

Central bank ...

Question

Central bank is an apex bank of the country that:

A

Controls the entire banking system of the country

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B

Issues currency

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C

Acts as a banker to the government

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D

All of these

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Solution

The correct option is D
All of these

The central bank performs all of these functions.

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Similar questions

Q. I am the apex banking institution. I control and regulate the entire banking system and money supply of the country. All the commercial banks have to follow the rules I set. I am the banker of all the banks and the government. Who am I?

Q. Fill in the blanks with appropriate alternatives given in the brackets.

1. Central bank has the __________ of note issue. (monopsony/monopoly/duopoly/oligopoly)
2. The central bank acts as a ____________ of cash reserves of the country. (head/ leader/ custodian/ locker)
3. Bank Rate is also called as __________ rate. (rediscount/ market/ general/ exchange)
4. ____________ is the apex body of the monetary and banking systems of the nation's economy. (Commercial bank/ Central bank/ Government/ Co-operative bank)
5. Reserve Bank of India was established in _____________. (1937/ 1939/ 1935/ 1934)

Q. State with reasons whether you agree or disagree with the following statements.

1. Central Bank is the Bank of Issue.
2. A co-operative bank acts as a lender of the last resort.
3. Credit control is the function of the Central Bank of the country.
4. Central Bank is a profit-making institution.
5. Central Bank having monopoly of note issue is most appropriate institute of the government.

Which of the following functions of a central bank may potentially conflict with its monetary policy role?

1. Supervisor of the banking system.

2. Banker to the banking system

3. Manager of the national debt.

4. Banker to the government.

5. Issuer of currency.

Q. RBI acts as the banker to the central government and commercial banks act as banker to the state governments.

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