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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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