Question

Select the correct one/ones if all banks in an economy are nationalised and converted into a monopoly bank:
1. Deposits will decrease in the new bank
2. Deposits will increase in the new bank
3. There will be no effect on either saving rate or lending Code:

• A. Only 1
• B. 1 and 2
• C. Only 2
• D. 1 and 3

Answer 1

The correct option is A Only 1

Monopoly will discourage the depositors from putting money in the bank-this being the main reason. The saving rate of the economy together with the lending activities of the bank will also get hampered.