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Question
Match the following and select the correct option.
| Column A | Column B | ||
| (i) | A deposit created by a customer | A. | Term deposit |
| (ii) | A deposit created by bank when loan is granted | B. | Demand deposits |
| (iii) | Deposits payable by bank on demand | C. | Initial deposit |
| (iv) | Deposits the amount of which can be withdrawn only after a fixed period of time | D. | Secondary deposit |
Options
(i) C, (ii) D, (iii) A, (iv) B
(i) B, (ii) A, (iii) D, (iv) C
(i) C, (ii) D, (iii) B, (iv) A
(i) D, (ii) C, (iii) A, (iv) B
Solution
(i) C, (ii) D, (iii) B, (iv) A
Explanation:
| Column A | Column B | ||
| (i) | A deposit created by a customer | C. | Initial deposit |
| (ii) | A deposit created by bank when loan is granted | D. | Secondary deposit |
| (iii) | Deposits payable by bank on demand | B. | Demand deposits |
| (iv) | Deposits the amount of which can be withdrawn only after a fixed period of time | A. | Term deposit |
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RELATED QUESTIONS
Define Credit Multiplier.
The creation of ______ is called credit creation.
Explain the role of legal reserve ratio and Bank rate in correcting inflationary gap in an economy.
Deposits made by the people from their own resources are called ______.
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Match the following:
| Column I | Column II | ||
| A. | Primary deposits | (i) | Payable on demand |
| B. | Derivative deposits | (ii) | Deposits for a fixed period of time |
| C. | Demand deposits | (iii) | Cash deposits of people |
| D. | Term deposits | (iv) | Deposits created by banks (or loan deposits) |
Match the following:
| Column I | Column II | ||
| A. | Formula of Money Multiplier | (i) | Inverse |
| B. | Money multiplier = 4 | (ii) | Money multiplier = 10 |
| C. | Relationship between LRR and money multiplier | (iii) | LRR = 0.25 |
| D. | LRR = 0.1 | (iv) | `1/"LRR"` |
What are secondary (derivative) deposits?
Why are the banks required to keep only a fraction of deposits as cash reserves?
