economicsChoose the given statement as true/false:Banks keep a small portion of their deposit as cash themselves.

Choose the given statement as true/false:


Banks keep a small portion of their deposit as cash themselves.


  1. A
    True
  2. B
    False 

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    Solution:

    The above statement is true.
    Banks are legitimate organisations that accept deposits that can be withdrawn on request. Banks are institutions that help people manage their finances, and public deposits in banks guarantee that they will withdraw money from their deposits as needed. The bank only keeps part of the deposit. Banks only hold a small fraction of deposits as cash on hand; the remainder is given to the borrowers as loans. In this manner, the banks use most deposits to provide loans. Banks charge greater interest rates on loans to earn a profit than on customer deposits.
     
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