| A statement with two arguments are given followed by four alternatives. Select the one which is most appropriate. |
| Statement |
| Should there be only one rate of interest for term deposits of varying durations in banks? |
| Arguments |
| I. No, People will refrain from keeping money for longer duration resulting into reduction of liquidity level of banks. |
| II. Yes, This will be much simple for the common people and they may be encouraged to keep more money in banks. |
A) Only I
B) Only II
C) Either I or II
D) Neither I nor II
Correct Answer: A
Solution :
Clearly the proposed scheme would discourage people from keeping deposits for long durations (the rate of interest being the same for durations) and not draw more funds. So, only argument I holds.
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