Multiple choice

Directions: In the question below a question is followed by two arguments numbered I and II. You have to decide which of the given arguments is/are ‘strong'.

Question: Should there be only one rate of interest for term deposits of varying durations in banks? Arguments: I. No, people will refrain money for longer duration resulting into reduction of liquidity level of banks. II. Yes, this will be much simpler for the common people and they may be encouraged to keep more money in banks.

  1. if only Argument II is strong

  2. if only Argument I is strong

  3. if either Argument I or II is strong

  4. if neither Argument I nor II is strong

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Clearly, the proposed scheme would discourage people from keeping deposits for longer durations (the rate of interest being the same for short durations) and not draw in more funds. So, only argument I holds.

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