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What is the primary function of commercial banks?

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Question: What is the primary function of commercial banks?

Options:

  1. Issuing currency
  2. Accepting deposits and providing loans
  3. Regulating monetary policy
  4. Managing foreign exchange

Correct Answer: Accepting deposits and providing loans

Solution: 

Commercial banks primarily accept deposits from the public and provide loans to individuals and businesses.

What is the primary function of commercial banks?

Practice Questions

Q1
What is the primary function of commercial banks?
  1. Issuing currency
  2. Accepting deposits and providing loans
  3. Regulating monetary policy
  4. Managing foreign exchange

Questions & Step-by-Step Solutions

What is the primary function of commercial banks?
  • Step 1: Understand that commercial banks are financial institutions.
  • Step 2: Know that one of their main jobs is to accept money from people and businesses, which is called deposits.
  • Step 3: Realize that they also lend money to people and businesses, which is called providing loans.
  • Step 4: Remember that these two functions (accepting deposits and providing loans) are the primary roles of commercial banks.
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