CBSE 2020 Class 12 Economics Delhi Set 2

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Question : 6
Total: 13

Explain the 'bank of note issue' function of Central Bank.
Solution:  
The central bank of country is responsible and authorised to issue currency notes also known as legal tender money. However the currency issued by central bank is its monetary liability. In other words, the central bank is obliged to buy back the currency issued by it by assets of equal value such as gold coins, forex.
Central bank issues currency to general public as well as to government of the country.
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