Q. Government of India has recently launched 'Jan Dhan Yojna' aimed at every household in the country to have at least one bank account. Explain how deposits mode under the plan are going to affect national income of the country.
Q.Why do we say that commercial banks create money while we also say that the central bank has the sole right to issue currency ? Explain. what is the likely impact of money creation by the commercial banks on national income.
Dear student,
'Jan Dhan Yojana' will result in an increase in the total deposits available to the commercial banks. An increase in total deposits will result in an increase in credit creation by the commercial banks. Credit creation will allow the commercial banks to lend funds to a larger extent and hence, will lead to an increase in investment in the economy. Therefore, the national income of the country will increase.
Note: You are requested to post different questions in separate threads.
'Jan Dhan Yojana' will result in an increase in the total deposits available to the commercial banks. An increase in total deposits will result in an increase in credit creation by the commercial banks. Credit creation will allow the commercial banks to lend funds to a larger extent and hence, will lead to an increase in investment in the economy. Therefore, the national income of the country will increase.
Note: You are requested to post different questions in separate threads.