Meaning and Definition of Central Bank? - Economics


Meaning and Definition of Central bank?

Define or Explain the following  concepts 

Central Bank


Solution 1

Meaning: - The central bank is the apex bank in the country. It enjoys the apex position in the country’s monetary and banking structure. It regulates and monitors the banking and monetary system in the country.

In India, the Reserve Bank of India is the Central bank it was established in 1935. Some of the prominent central banks include Bank of England. Federal Reserve Bank (USA), People’s Bank of China and so on.

Definitions: - “A central Bank is one which constitutes the apex of the monetary and banking structure of its country, and which performs as best as it can in the national interest, certain functions such as note issue, banker to the government, banker to the banks, and custodian of country’s foreign exchange reserves”.

Solution 2

Central Bank is the apex institution of a country's monetary system that regulates and controls the activities of all the commercial banks and other financial institutions of the country. It plays an important role in the organisation and development of a sound monetary and financial system in an economy.

Concept: Definition - Central Bank
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2013-2014 (October)


The RBI was nationalised in the year 1935.

There is no difference between the Central bank and a commercial bank.

The central bank can increase availability of credit by: (Choose the correct alternative)

(a) Raising repo rate

(b) Raising reverse repo rate

(c) Buying government securities

(d) Selling government securities

Explain the role of the Reserve Bank of India as the “lender of last resort”.

What is a central bank? 

Fill in the blank using proper alternative given in the bracket:

......................... is the apex body of the monetary and banking system of the nation’s economy.

Give reason or explain the following.

Cash reserve ratio (CRR) affects the lending capacity of banks.

Match the following Group ‘A’ with Group ‘B’

Group A Group B
(a) Electricity (1) Inelastic demand
(b) Complementary goods (2) Share brokers
(c) Pension (3) Elastic demand
(d) D - mat account (4) Composite demand
(e) Central Bank 5) Transfer income
  (6) Primary function of Commercial Banks
  (7) ATM facility
(8) Apex banking institution

Give reason or explain the following statement:

Central Bank acts as a lender of the last resort.

Match the following:

Group A Group B
a. Demand and Price (1) Interest
b. Stock (2) Stock
c. Reward of Capital (3) Reserve Bank of India
d. Unemployment allowance (4) Bank of India
e. Central Bank (5) Direct relation
  (6) Potential Supply
  (7) Transfer Income
  (8) Inverse relation

Explain, with reason, whether you Agree or Disagree with the following statement :

Central Bank is a profit making institution ?

Fill in the blanks using proper alternatives given in the bracket 

____________ bank has the monopoly of note issue. 

State whether the following statements are True or False: 

Central Bank acts as a lender of the last resort.



Define or explain the concept of Lender of the last resort .

State whether the following statement is True or False with reason:

Central Bank works for profit.

Rewrite the following sentences by using proper substitute given in the bracket: 

__________ has monopoly to issue the currency notes. 

Fill in the blanks with appropriate alternatives given in the bracket.  

To increase credit creation Central Bank __________ the debentures. 

Fill in the blank with appropriate alternatives given below

____________ is the apex body of the monetary and banking systems of the nation's economy.

Fill in the blank with appropriate alternatives given below

Reserve Bank of India was established in _____________.

Match the following: 

Group A Group B
1. Central bank a. Quantitative measure of credit
2. Clearing house   b. Apex banking institution
3. Credit control    c. Deliberate buying and selling of government securities
4. Direct action  d. Selective method of credit control
5. Open market operations  e. Central bank
  f. Government
  g. S.L.R. (Statutory Liquidity Ratio)

Define or Explain the following concept.

Prof. Samuelson's definition of Central Bank 

Define or Explain the following concept.

 Open Market Operation 

Define or Explain the following concept.

Moral suasion 

Define or Explain the following concept.

Cash Reserve Ratio 

Give reason or explain.

As a banker to the government, the Central Bank transfers government funds. 

Give reason or explain.

A Central Bank may take 'Direct Action' against the defaulting commercial banks. 

Distinguish between:

Central Bank and Commercial Bank

Write short note on:

Definition of a Central Bank 

Fill in the blank using appropriate alternatives given below

The e - banking facility is provided through _________

In order to encourage investment in the economy, the Central Bank may ______.

Choose the Correct Answer.

The Central bank of India is ______

Choose the Correct Answer.

Which of the following is not a function of a central bank?

Briefly explain about Central Bank.

Central Bank is an ______.


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