Question : Assertion (A) The currency notes do not carry as much value in them as is denominated, but still have general acceptance.
Reason (R) Currency notes are backed by a legal promise from the central bank and central government of the country.
Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Option 2: Both Assertion (A) and Reason (R) are true but Reason (R) is the not correct explanation of Assertion (A)
Option 3: Assertion (A) is true, but Reason (R) is false.
Option 4: Assertion (A) is false, but Reason (R) is true.
Correct Answer: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Solution : The correct answer is (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
Assertion is true because the value of currency notes is not derived from the physical material they are made of but from the trust and belief placed in them by the public. The actual value of the currency notes is often much lower than the face value printed on them, as the cost of printing is usually significantly less than the value they represent. However, despite this, currency notes are generally accepted in transactions because of the confidence and trust placed in the issuing authority.
Reason is the correct explanation of Assertion (A). Currency notes derive their value and acceptance from the legal promise made by the central bank and the central government that they will be accepted as a medium of exchange and can be redeemed for goods, services, or other forms of value. The backing and guarantee provided by the central bank and the central government instill confidence in the public, ensuring the general acceptance of currency notes.
Therefore, both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
Question : Assertion (A) Currency held by the public is a monetary liability of the central bank.
Reason (R) Central bank controls credit, whereas commercial banks create credit with the currency held by the public.
Question : Assertion (A): Currency money is also termed as Fiat money.
Reason(R): Under law, currency must be accepted for payment for all debts.
Option 1: Both Assertion (A) and Reason(R) are true and Reason (R) is the correct explanation of Assertion (A)
Option 2: Both Assertion (A) and Reason(R) are true, but Reason (R) is not the correct explanation of Assertion (A)
Option 4: Assertion (A) Is false, but Reason (R) is true.
Question : Assertion(A)Central Bank as a banker to the government, works as a custodian of cash reserves.
Reason(R) The Central Bank acts as a clearinghouse for the transfer and settlement of mutual claims of commercial banks.
Question : Assertion (A) Central Bank as a banker to the government, works as a custodian of cash reserves.
Question : Assertion (A): A new business is likely to have lesser goodwill. Reason (R): Goodwill is an intangible asset.
Option 2: Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A)
Option 3: Assertion (A) is true but Reason (R) is false
Option 4: Assertion (A) is false but Reason (R) is true
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