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Question
Assertion (A): Central Bank provides loans to the commercial bank in the situation of financial distress.
Reasoning (R): Central Bank can order the government to help the bank facing the financial crisis.
Options
A is true but R is false.
A is false but R is true.
Both A and R are true and R explains A.
Both A and R are true but R does not explain A.
Solution
A is true but R is false.
Explanation:
When commercial banks have a financial crisis, the central bank serves as a lender of last resort, providing loans. However, the central bank cannot direct the government to assist the bank.
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