Q15 of 25 Page 1

State the role played by the central bank as the ‘‘lender of last resort’’.

Reserve Bank of India is the central bank of India that regulator other commercial banks of the country and it also promotes stability and controls inflation.

It is called Banker’s bank And Lender of Last Resort because:


• It acts as a banker to other banks.


• It provides financial assistance to scheduled banks and state co-operative banks through bills, advances, and loans.


• RBI acts as a lender of last resort by providing funds to the bank when they fail to get it from any other source.


More from this chapter

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13

Define ‘‘demand deposits’’.

 14

State any two examples of non-tax revenue receipts of the government.

OR


Dividends received from Public Sector Undertakings (PSUs) are a part of the government’s ____________. (Choose the correct alternative)


A. Non-tax Revenue Receipts


B. Tax Receipts


C. Capital Receipts


D. Capital Expenditure


 16

Suppose you are a member of the ‘‘Advisory Committee to the Finance Minister of India’’. The Finance Minister is concerned about the rising Revenue Deficit in the budget. Suggest anyone measure control the rising Revenue Deficit of the

government.


 17

The consumption function of an economy is : C = 40 + 0 �8 Y (amount in <crores). Determine what level of income where the average propensity to Consume (APC) will be one.

OR


Which of the two, average propensity to consume or average propensity to save, can be negative and why?