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Credit Creation

Commercial ba...

Question

Commercial banks create money by way of:

A

Time deposits

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B

Demand deposits

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C

Treasury bills

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D

Bill of exchange

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Solution

The correct option is B
Demand deposits

Using demand deposits, commercial banks create money.

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Similar questions

Q. In terms of money supply,

Currency note and coins in circulation + Net demand deposits held in commercial banks = _____

Q. How do commercial banks create deposits? Explain.

Q. State whether the following statements are True or False.
1. Commercial banks are the backbone of modern economy.
2. The saving bank deposit can be opened with a small amount.
3. Credit money is created by the central bank of a country.
4. There is no difference between primary deposit and secondary deposit of a commercial bank.

Q. Which of the following pairs are correctly matched?

1

. Treasury Bills - RBI

2

. Interest Rate - Discount and Finance House of India

3

. Call money rate - Commercial banks

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. Prudential norms - RBI
Select the correct answer using the codes given.

Q. If total deposit created by commercial banks is

R s . 20.000

crores and the primary deposit is

R s . 2, 500

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