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What is the primary function of a central bank in a country?
- a)To issue currency and regulate the money supply
- b)To accept public deposits
- c)To provide loans to individuals
- d)To maximize profits for commercial banks
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
What is the primary function of a central bank in a country?a) To issu...
The central bank's main function is to issue currency and regulate the money supply, which is crucial for maintaining economic stability. Unlike commercial banks, it does not engage in profit-making activities.
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What is the primary function of a central bank in a country?a) To issu...
The Primary Function of a Central Bank
Central banks play a crucial role in a country's economy, primarily focusing on maintaining monetary stability. Here’s a detailed breakdown of their main function:
1. Issuing Currency
- Central banks are responsible for the production and distribution of the national currency.
- They ensure that there is enough money in circulation to meet the demands of the economy.
2. Regulating the Money Supply
- Central banks control the amount of money available in the economy through various monetary policy tools.
- This regulation helps manage inflation and stabilize the economy, ensuring sustainable growth.
3. Monetary Policy Implementation
- They set key interest rates, influencing borrowing and spending in the economy.
- By adjusting these rates, central banks can either stimulate economic growth (by lowering rates) or cool down an overheated economy (by raising rates).
4. Financial Stability
- Central banks monitor and manage systemic risks in the financial system.
- They act as a lender of last resort to commercial banks, ensuring liquidity during financial crises.
5. Economic Research and Data Analysis
- Central banks conduct research to inform their policies and understand economic trends.
- They provide valuable data to the government and the public, enhancing transparency and trust.
In conclusion, while central banks do not typically accept public deposits, provide loans to individuals, or aim to maximize profits for commercial banks, their primary function remains the issuance of currency and the regulation of the money supply. This ensures a stable economic environment conducive to growth and prosperity.
Central banks play a crucial role in a country's economy, primarily focusing on maintaining monetary stability. Here’s a detailed breakdown of their main function:
1. Issuing Currency
- Central banks are responsible for the production and distribution of the national currency.
- They ensure that there is enough money in circulation to meet the demands of the economy.
2. Regulating the Money Supply
- Central banks control the amount of money available in the economy through various monetary policy tools.
- This regulation helps manage inflation and stabilize the economy, ensuring sustainable growth.
3. Monetary Policy Implementation
- They set key interest rates, influencing borrowing and spending in the economy.
- By adjusting these rates, central banks can either stimulate economic growth (by lowering rates) or cool down an overheated economy (by raising rates).
4. Financial Stability
- Central banks monitor and manage systemic risks in the financial system.
- They act as a lender of last resort to commercial banks, ensuring liquidity during financial crises.
5. Economic Research and Data Analysis
- Central banks conduct research to inform their policies and understand economic trends.
- They provide valuable data to the government and the public, enhancing transparency and trust.
In conclusion, while central banks do not typically accept public deposits, provide loans to individuals, or aim to maximize profits for commercial banks, their primary function remains the issuance of currency and the regulation of the money supply. This ensures a stable economic environment conducive to growth and prosperity.
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What is the primary function of a central bank in a country?a) To issue currency and regulate the money supplyb) To accept public depositsc) To provide loans to individualsd) To maximize profits for commercial banksCorrect answer is option 'A'. Can you explain this answer? for Class 10 2025 is part of Class 10 preparation. The Question and answers have been prepared according to the Class 10 exam syllabus. Information about What is the primary function of a central bank in a country?a) To issue currency and regulate the money supplyb) To accept public depositsc) To provide loans to individualsd) To maximize profits for commercial banksCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Class 10 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the primary function of a central bank in a country?a) To issue currency and regulate the money supplyb) To accept public depositsc) To provide loans to individualsd) To maximize profits for commercial banksCorrect answer is option 'A'. Can you explain this answer?.
What is the primary function of a central bank in a country?a) To issue currency and regulate the money supplyb) To accept public depositsc) To provide loans to individualsd) To maximize profits for commercial banksCorrect answer is option 'A'. Can you explain this answer? for Class 10 2025 is part of Class 10 preparation. The Question and answers have been prepared according to the Class 10 exam syllabus. Information about What is the primary function of a central bank in a country?a) To issue currency and regulate the money supplyb) To accept public depositsc) To provide loans to individualsd) To maximize profits for commercial banksCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Class 10 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the primary function of a central bank in a country?a) To issue currency and regulate the money supplyb) To accept public depositsc) To provide loans to individualsd) To maximize profits for commercial banksCorrect answer is option 'A'. Can you explain this answer?.
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