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    Question

    There is a situation in which there is an extreme fall

    of demand for loans. What should be done by banks in such a situation?
    A Increase the liquidity Correct Answer Incorrect Answer
    B Sell government securities Correct Answer Incorrect Answer
    C Increase the prime rate Correct Answer Incorrect Answer
    D Change their portfolio Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    When there is an extreme fall of demand for loans; banks shall increase the liquidity in such a situation.

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