Podcast
Questions and Answers
What is the relationship between credit creation and periods of prosperity?
What is the relationship between credit creation and periods of prosperity?
- Credit creation is large during periods of prosperity. (correct)
- Credit creation is small during periods of prosperity.
- Credit creation does not vary with periods of prosperity.
- Credit creation is unpredictable during periods of prosperity.
Why does the volume of bank credit tend to be high during periods of prosperity?
Why does the volume of bank credit tend to be high during periods of prosperity?
- High liquidity preference by people
- Decreased demand for loans
- Increased demand for loans and advances (correct)
- Central Bank's monetary policy
What is the impact of business depression on the volume of bank credit?
What is the impact of business depression on the volume of bank credit?
- Volume of bank credit becomes unpredictable
- Volume of bank credit increases
- Volume of bank credit remains constant
- Volume of bank credit decreases (correct)
What is one reason for leakages in the process of credit creation mentioned in the text?
What is one reason for leakages in the process of credit creation mentioned in the text?
What is required for a bank to create credit according to the text?
What is required for a bank to create credit according to the text?
How does the power of banks to create credit get affected if people desire to hold more cash?
How does the power of banks to create credit get affected if people desire to hold more cash?
What is the primary function of a commercial bank?
What is the primary function of a commercial bank?
Which type of deposits are also known as demand deposits?
Which type of deposits are also known as demand deposits?
Who mainly uses current deposits in a commercial bank?
Who mainly uses current deposits in a commercial bank?
Which type of deposit is meant for professional men and middle-class people according to the text?
Which type of deposit is meant for professional men and middle-class people according to the text?
What is the restriction on savings deposits regarding withdrawals?
What is the restriction on savings deposits regarding withdrawals?
What type of deposit does not generally earn interest in a commercial bank?
What type of deposit does not generally earn interest in a commercial bank?
Why are all bills in hand shown on both sides of the balance sheet?
Why are all bills in hand shown on both sides of the balance sheet?
Why is bank capital important for protecting depositors?
Why is bank capital important for protecting depositors?
How do reserve accounts differ from retained earnings?
How do reserve accounts differ from retained earnings?
What is the significance of the proportion of capital to deposits for a bank?
What is the significance of the proportion of capital to deposits for a bank?
Which type of accounts represent direct investments in a bank?
Which type of accounts represent direct investments in a bank?
Why do banks maintain lower capital accounts compared to other businesses?
Why do banks maintain lower capital accounts compared to other businesses?
What is the term used to describe the power of commercial banks to expand deposits through loans, advances, and investments?
What is the term used to describe the power of commercial banks to expand deposits through loans, advances, and investments?
How does the cash reserve ratio affect the volume of credit that commercial banks can create?
How does the cash reserve ratio affect the volume of credit that commercial banks can create?
What role does the banking habit of the people play in credit creation by commercial banks?
What role does the banking habit of the people play in credit creation by commercial banks?
Which factor mentioned in the text has the power to prescribe and change the cash reserve ratio to be kept by commercial banks?
Which factor mentioned in the text has the power to prescribe and change the cash reserve ratio to be kept by commercial banks?
How does the nature of business conditions in the economy impact credit creation by commercial banks?
How does the nature of business conditions in the economy impact credit creation by commercial banks?
Why can't all deposits be used for credit creation by commercial banks?
Why can't all deposits be used for credit creation by commercial banks?
What is the role of a commercial bank in terms of credit?
What is the role of a commercial bank in terms of credit?
How does a commercial bank act as a 'mobiliser of savings'?
How does a commercial bank act as a 'mobiliser of savings'?
What is the historical connection between modern banking and the Industrial Revolution?
What is the historical connection between modern banking and the Industrial Revolution?
How do commercial banks contribute to economic activity?
How do commercial banks contribute to economic activity?
What distinguishes a commercial bank from other financial institutions?
What distinguishes a commercial bank from other financial institutions?
In what way does a commercial bank act as a 'reservoir' in the economy?
In what way does a commercial bank act as a 'reservoir' in the economy?
