What is the primary function of a commercial bank?

Practice Questions

Q1
What is the primary function of a commercial bank?
  1. To issue currency
  2. To provide loans and accept deposits
  3. To manage government accounts
  4. To regulate the money supply

Questions & Step-by-Step Solutions

What is the primary function of a commercial bank?
  • Step 1: Understand what a commercial bank is. A commercial bank is a financial institution that offers various services to the public.
  • Step 2: Identify the main services provided by commercial banks. These include accepting deposits and providing loans.
  • Step 3: Recognize that accepting deposits means people can keep their money in the bank for safekeeping.
  • Step 4: Understand that providing loans means the bank gives money to people or businesses that need it, which they will pay back later with interest.
  • Step 5: Conclude that the primary function of a commercial bank is to manage money by accepting deposits and giving out loans.
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