Ms. Sakshi, an economics teacher, was explaining the concept of ‘minimum percentage of the total deposits to be kept by any commercial bank with the Central Bank of the country, as per norms and statute prevailing in the country’.
From the following, choose the correct alternative which specifies towards the concept explained by her?
a)
Cash Reserve Ratio
b)
Repo Rate
c)
Bank Rate
d)
Statutory Liquidity Ratio
Correct answer is option 'A'. Can you explain this answer?

Question

Ms. Sakshi, an economics teacher, was explaining the concept of ‘minimum percentage of the total deposits to be kept by any commercial bank with the Central Bank of the country, as per norms and statute prevailing in the country’.
From the following, choose the correct alternative which specifies towards the concept explained by her?

a)
Cash Reserve Ratio
b)
Repo Rate
c)
Bank Rate
d)
Statutory Liquidity Ratio

Correct answer is option 'A'. Can you explain this answer?

Answer

Supply and demand to her students. She began by explaining that supply refers to the amount of a particular product or service that producers are willing and able to provide to the market at a given price. She emphasized that supply is influenced by various factors such as production costs, availability of resources, technology, and government regulations.

Next, Ms. Sakshi moved on to explain the concept of demand. She stated that demand refers to the quantity of a product or service that consumers are willing and able to purchase at a given price. She highlighted that demand is influenced by factors such as consumer preferences, income levels, population demographics, and price of related goods.

Ms. Sakshi then proceeded to discuss the relationship between supply and demand. She explained that when the price of a product or service increases, the quantity supplied by producers tends to increase, while the quantity demanded by consumers tends to decrease. This is due to the fact that producers are incentivized to supply more at higher prices, but consumers may be less willing or able to purchase at higher prices.

On the other hand, when the price of a product or service decreases, the quantity supplied by producers tends to decrease, while the quantity demanded by consumers tends to increase. Ms. Sakshi emphasized that this is because producers may be less motivated to supply at lower prices, while consumers are more likely to purchase at lower prices.

Ms. Sakshi also discussed the concept of equilibrium, where the quantity supplied equals the quantity demanded at a specific price. She explained that when the market is in equilibrium, there is a balance between supply and demand, resulting in stability in price and quantity.

Overall, Ms. Sakshi's explanation of supply and demand helped her students understand the fundamental concepts and their interplay in the market. She encouraged her students to analyze real-world examples and current events to further deepen their understanding of these economic principles.

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