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Statement Argument - 1
Directions: In the question below, a question statement 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 from keeping money for longer duration resulting into reduction of liquidity level of banks.
II. Yes, this will be much simple for the common people and they may be encouraged to keep more money in banks.
I is strong because higher rates attract people to deposit money for longer duration. If there will be only one rate of interest for term deposits for varying durations, this will adversely affect deposit of money in banks for longer duration and also the liquidity levels of banks. II is not strong because only one rate of interest does not encourage people for more savings.