Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Money and Banking

Question:

Which of the following is not a function of commercial banks ?

Options:

Accepts deposits from the public

Controls money supply

 Gives loans to the public

Creates loans to the public

Correct Answer:

Controls money supply

Explanation:

The correct answer is option (2) : Controls money supply

Controls money supply is not a function of commercial banks. The control of the money supply is typically a function of central banks, which set monetary policy to achieve economic goals such as price stability and full employment.

Commercial banks play a role in the money supply through their lending and deposit activities, but the direct control and regulations of the money supply fall under the purview  of the central bank.