Class 10 Exam > Class 10 Questions > Which of the following statements best descri...
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Which of the following statements best describes the difference between a central bank and a commercial bank?
- a)Central banks provide loans to individuals
- b)Commercial banks accept public deposits, while central banks do not
- c)Central banks focus on profit maximization
- d)Both can issue currency
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Which of the following statements best describes the difference betwee...
Commercial banks accept deposits from the public and offer loans, while central banks do not accept public deposits and are primarily focused on regulating the banking system and monetary policy.
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Which of the following statements best describes the difference betwee...
Understanding Central Banks vs. Commercial Banks
The distinction between central banks and commercial banks is crucial in the financial system. Here’s a detailed breakdown:
Role of Central Banks
- Central banks are responsible for managing a country's monetary policy.
- They regulate money supply, interest rates, and oversee the banking system.
- Their primary goal is to maintain economic stability rather than profit maximization.
Function of Commercial Banks
- Commercial banks serve individuals and businesses by accepting deposits and providing loans.
- They operate for profit, charging interest on loans and paying interest on deposits.
- Commercial banks facilitate everyday banking services, including checking and savings accounts.
Key Difference: Deposits
- Central banks do not accept public deposits. Their funding comes from the government and other financial institutions.
- In contrast, commercial banks rely heavily on public deposits to fund their lending activities.
Currency Issuance
- Only central banks have the authority to issue currency. Commercial banks cannot create legal tender but can create bank credit through loans.
Conclusion
Thus, the correct statement is option 'B': "Commercial banks accept public deposits, while central banks do not." This highlights the fundamental difference in their operational roles within the economy. Understanding these differences is essential for grasping how financial systems function.
The distinction between central banks and commercial banks is crucial in the financial system. Here’s a detailed breakdown:
Role of Central Banks
- Central banks are responsible for managing a country's monetary policy.
- They regulate money supply, interest rates, and oversee the banking system.
- Their primary goal is to maintain economic stability rather than profit maximization.
Function of Commercial Banks
- Commercial banks serve individuals and businesses by accepting deposits and providing loans.
- They operate for profit, charging interest on loans and paying interest on deposits.
- Commercial banks facilitate everyday banking services, including checking and savings accounts.
Key Difference: Deposits
- Central banks do not accept public deposits. Their funding comes from the government and other financial institutions.
- In contrast, commercial banks rely heavily on public deposits to fund their lending activities.
Currency Issuance
- Only central banks have the authority to issue currency. Commercial banks cannot create legal tender but can create bank credit through loans.
Conclusion
Thus, the correct statement is option 'B': "Commercial banks accept public deposits, while central banks do not." This highlights the fundamental difference in their operational roles within the economy. Understanding these differences is essential for grasping how financial systems function.
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Which of the following statements best describes the difference between a central bank and a commercial bank?a) Central banks provide loans to individualsb) Commercial banks accept public deposits, while central banks do notc) Central banks focus on profit maximizationd) Both can issue currencyCorrect answer is option 'B'. 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 Which of the following statements best describes the difference between a central bank and a commercial bank?a) Central banks provide loans to individualsb) Commercial banks accept public deposits, while central banks do notc) Central banks focus on profit maximizationd) Both can issue currencyCorrect answer is option 'B'. 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 Which of the following statements best describes the difference between a central bank and a commercial bank?a) Central banks provide loans to individualsb) Commercial banks accept public deposits, while central banks do notc) Central banks focus on profit maximizationd) Both can issue currencyCorrect answer is option 'B'. Can you explain this answer?.
Which of the following statements best describes the difference between a central bank and a commercial bank?a) Central banks provide loans to individualsb) Commercial banks accept public deposits, while central banks do notc) Central banks focus on profit maximizationd) Both can issue currencyCorrect answer is option 'B'. 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 Which of the following statements best describes the difference between a central bank and a commercial bank?a) Central banks provide loans to individualsb) Commercial banks accept public deposits, while central banks do notc) Central banks focus on profit maximizationd) Both can issue currencyCorrect answer is option 'B'. 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 Which of the following statements best describes the difference between a central bank and a commercial bank?a) Central banks provide loans to individualsb) Commercial banks accept public deposits, while central banks do notc) Central banks focus on profit maximizationd) Both can issue currencyCorrect answer is option 'B'. Can you explain this answer?.
Solutions for Which of the following statements best describes the difference between a central bank and a commercial bank?a) Central banks provide loans to individualsb) Commercial banks accept public deposits, while central banks do notc) Central banks focus on profit maximizationd) Both can issue currencyCorrect answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for Class 10.
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Which of the following statements best describes the difference between a central bank and a commercial bank?a) Central banks provide loans to individualsb) Commercial banks accept public deposits, while central banks do notc) Central banks focus on profit maximizationd) Both can issue currencyCorrect answer is option 'B'. Can you explain this answer?, a detailed solution for Which of the following statements best describes the difference between a central bank and a commercial bank?a) Central banks provide loans to individualsb) Commercial banks accept public deposits, while central banks do notc) Central banks focus on profit maximizationd) Both can issue currencyCorrect answer is option 'B'. Can you explain this answer? has been provided alongside types of Which of the following statements best describes the difference between a central bank and a commercial bank?a) Central banks provide loans to individualsb) Commercial banks accept public deposits, while central banks do notc) Central banks focus on profit maximizationd) Both can issue currencyCorrect answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Which of the following statements best describes the difference between a central bank and a commercial bank?a) Central banks provide loans to individualsb) Commercial banks accept public deposits, while central banks do notc) Central banks focus on profit maximizationd) Both can issue currencyCorrect answer is option 'B'. Can you explain this answer? tests, examples and also practice Class 10 tests.
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