Question : Assertion(A)Central Bank as a banker to the government, works as a custodian of cash reserves.
Reason(R) The Central Bank acts as a clearinghouse for the transfer and settlement of mutual claims of commercial banks.
Option 1: Both Assertion (A) and Reason(R) are true and Reason (R) is the correct explanation of Assertion (A)
Option 2: Both Assertion (A) and Reason(R) are true, but Reason (R) is not the correct explanation of Assertion (A)
Option 3: Assertion (A) is true, but Reason (R) is false.
Option 4: Assertion (A) Is false, but Reason (R) is true.
Correct Answer: Both Assertion (A) and Reason(R) are true, but Reason (R) is not the correct explanation of Assertion (A)
Solution : The correct answer is (b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
Assertion isalso true as the Central Bank does facilitate the transfer and settlement of mutual claims of commercial banks. However, Reason does not directly explain Assertion), as the custodial role of the Central Bank is separate from its clearinghouse function.
Question : Assertion (A) Central Bank as a banker to the government, works as a custodian of cash reserves.
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Reason (R) Government borrows internally from banks and the general public.
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Reason (R) Currency notes are backed by a legal promise from the central bank and central government of the
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