True or false: money and banks

Exercise and reference answers

Questions

1. Statement is true

   Yes

   Statement

   A bank lends because it does not expect every depositor to withdraw at once.

2. Statement is true

   No

   Statement

   Deposits are an asset of the bank.

3. Statement is true

   Yes

   Statement

   Reserves are the deposits a commercial bank keeps with the Reserve Bank.

4. Statement is true

   No

   Statement

   A general rise in prices raises the purchasing power of money.

5. Statement is true

   Yes

   Statement

   India got its central bank in 1935.

Instructions

Decide whether each statement about money and banking is true or false.

Explanation