All categories

3 years ago

What are the relationship between household and commercial bank

Business

1 answer:

Sindrei [870]3 years ago

6 0

Does this help?

All commercial banks must keep an account with the Central Bank. These balances are used for cheque clearing purposes between banks. Payments for cheques between banks are set off at the Central Bank’s clearing house. The Central Bank can also demand commercial banks to deposit a certain percentage of their total deposits with the central bank in order to control the money supply.

The Central Bank is a lender of last resort and will aid commercial banks when needed. The Central Bank dictates the interest rate that commercial banks can offer by setting the bank rate. This is the interest rate set by the Central Bank and the rate at which commercial banks and the Central Bank do business, e.g. loans offered by the Central Bank to commercial bank.

You might be interested in

Need help on some questions.. easy points...

lilavasa [31]

11. Prioritizing steps to solve the problem.

12. Addressing the cause of the problem

13. To reach fair negotiations with all concerned parties.

I'm not 100% certain on these answers but I hope I help to my best ability.

3 0

3 years ago

Read 2 more answers

Which item below is an incorrect statement about the difference between the discount rate and the federal funds rate? a) The fed

mestny [16]

Answer:

a) The federal funds rate has a higher interest rate than the discount rate to encourage borrowing

Explanation:

The Feds fund rate is the rate at which banks borrow from each other usually overnight, while the discount rate is the interest rate charged by the Fed to commercial banks for borrowing directly from the Fed.

These borrowings help the commercial banks meet up their liquidity requirements.

The discount rate is higher than the Fed funds rate. This is to encourage banks to borrow from each other instead of borrowing directly from the Federal Reserve.

The Fed fund rate also tends to affect the prime lending rate (rate at which banks lend money to their clients).

So the statement - The federal funds rate has a higher interest rate than the discount rate to encourage borrowing. Is not correct

5 0

3 years ago

Why do we have a graduated income tax?

lina2011 [118]

Supporters of the progressive system claim that higher salaries enable affluent people to pay higher taxes and that this is the fairest system because it lessens the tax burden of the poor. ... Taxes do not discourage high earners from earning more, and the low tax rate encourages the poor to strive to earn more.

7 0

3 years ago

The following data is available for Sampson Corporation. Sampson Corporation Accounts Item Amount Net income $200,000 Depreciati

frosja888 [35]

Answer:

cash flow provided by operation 260,000

Explanation:

net income 200,000

adjustment for non-monetary terms: (A)

depreciation expense 60,000

loss on sale of land 15,000

adjusted net income 275,000

Change in working capital:

decrease in AR 30,000

Decrease in AP (45,000) (B)

net change in WC: (15,000) (C)

cash flow provided by operation 260,000

(A) we must focus on cahs movement so the depreciation and loss on sale which are non-mentary term. This are not related to cash

(B) the decrease in account receivable means we colelct from our customer more.

4 0

4 years ago

Which of the following gives Dunkin’ Donuts a competitive edge over Krispy Kreme? It features fresh donuts. It is better known i

Anarel [89]

Dunkin has more international stores

6 0

3 years ago