| Assertion [A] Currency held by public is a monetary liability of central bank. |
| Reason [R] Central bank controls credit, whereas commercial banks create credit with the currency held by public. |
A) Both Assertion [A] and Reason [R] are true and Reason [R] is the correct explanation of Assertion [A]
B) Both Assertion [A] and Reason [R] are true, but Reason [R] is not the correct explanation of Assertion [A]
C) Assertion [A] is true, but Reason [R] is false
D) Assertion [A] is false, but Reason [R] is true
Correct Answer: B
Solution :
As currency held by general public has very low intrinsic value as compared to its denominated value, it becomes the monetary liability of the issuing authorities.
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