Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Money and Banking

Question:

Match the following:

1. Currency authority A. Lender's last resort
2. Banker to the government B. Bank of Issue
3. Banker's bank C. Periodic inspection
4. Supervisor D. Managing public debt
Options:

1-C, 2-B, 3-A, 4-D

1-B, 2-D, 3-A, 4-C

1-A, 2-D, 3-B, 4-C

1-B, 2-D, 3-C, 4-A

Correct Answer:

1-B, 2-D, 3-A, 4-C

Explanation:

The central bank performs the following functions:

  • Currency authority: The central bank has the right to issue the currency, also known as the bank of issue
  • Banker to the government: It performs all the functions of the government including granting land, managing public debt, advising the government, and agent to the government.
  • Banker's bank: It acts as custodian of cash reserve, provides centralized clearing, and is the lender of last resort.
  • Supervisor: It also carries periodic inspection of banks.