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Commerce Exam  >  Commerce Questions  >  Central Bank of a country does not deal with ... Start Learning for Free
Central Bank of a country does not deal with ________.
  • a)
    State Government 
  • b)
    Public
  • c)
    Central Government 
  • d)
    Commercial Banks 
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
Central Bank of a country does not deal with ________.a)State Governme...
Central Bank of a country does not deal with State Government.

Explanation:
Central Bank is the apex financial institution of a country that controls and regulates the money supply in the economy. It performs various functions for maintaining the stability and growth of the economy. However, it does not deal with the State Government directly, as the state government has its own financial institution known as State Bank of India (SBI).

The Central Bank of a country deals with the following entities:

Public:
Central Bank of a country deals with the public directly by providing various financial services like opening bank accounts, providing loans, issuing currency notes, etc.

Central Government:
Central Bank is also responsible for dealing with the Central Government of the country. It performs various functions like managing the government's accounts, issuing and managing government securities like bonds and treasury bills, etc.

Commercial Banks:
Central Bank is responsible for regulating and supervising commercial banks in the country. It provides loans and advances to commercial banks and also acts as a lender of the last resort.

Conclusion:
Although the Central Bank of a country does not deal with the State Government directly, it indirectly affects the state government by regulating and controlling the money supply in the economy.
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Community Answer
Central Bank of a country does not deal with ________.a)State Governme...
It doesn't deal with public because for dealing with public there are many other banks regulated by central bank.
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Read the following case study paragraph carefully and answer the question based on the same.The central bank of India i.e. Reserve Bank of India is the apex institution that controls the entire financial market. It’s one of the major functions is to maintain the reserve of foreign exchange. Also, it intervenes in the foreign exchange market to stabilize the excessive fluctuation in the foreign exchange rate.In other words, it is the central bank’s job to control a country’s economy through monetary policy; if the economy is moving slowly or going backward, there are steps that the central bank can take to boost the economy. These steps, whether they are asset purchases or printing more money, all involve injecting more cash into the economy. The simple supply and demand economic projection occurs and currency will devalue.When the opposite occurs, and the economy is growing, the central bank will use various methods to keep that growth steady and in-line with other economic factors such as wages and prices. Whatever the central bank does or doesn’t do, will affect the currency of that country. Sometimes, it is within the central bank’s interest to purposefully affect the value of a currency. For example, if the economy is heavily reliant on exports and their currency value becomes too high, importers of that country’s commodities will seek cheaper supply; hence directly affecting the economy.Q. Which of the following steps should be taken by the central bank if there is an excessive rise in the foreign exchange rate?

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Central Bank of a country does not deal with ________.a)State Governmentb)Publicc)Central Governmentd)Commercial BanksCorrect answer is option 'B'. Can you explain this answer?
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