Assertion (A): Currency held by public is a monetary liability of Reserve Bank of India (RBI).
Assertion (A): Currency held by public is a monetary liability of Reserve Bank of India (RBI).
Reason (R): RBI control credit, while Commercial Banks create credit.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is True but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is True
Anurag Pathak Changed status to publish January 5, 2024
Ans – (b)
Explanation:-
Assertion (A) is correct as the Currency held by the public is a monetary liability of the Reserve Bank of India as the Central Bank is obliged to back the currency with assets of equal value to enhance the public confidence in paper currency.
Reason (R) is correct as RBI controls the credit through its monetary policy and commercial banks create credit.
But Reason (R) is not the correct explanation of Assertion (A).
Anurag Pathak Changed status to publish January 5, 2024
