ExpertEasy1 markMultiple Choice
AQA GCSE · Question 08 · How the economy works
Which of the following is not a role of a high street bank?
Which of the following is not a role of a high street bank?
Answer options:
A.
Ensuring funds are available for investment
B.
Keeping inflation at its target rate
C.
Lending funds to those wishing to borrow
D.
Providing a place for savers to securely deposit their money
How to approach this question
Review the primary functions of a commercial (high street) bank. Then, consider each option and determine if it fits those functions. Identify the option that describes the role of a different financial institution, specifically the central bank.
Full Answer
B.Keeping inflation at its target rate✓ Correct
The correct answer is B. Keeping inflation at its target rate is the primary role of the country's central bank (the Bank of England in the UK), not commercial high street banks.
High street (commercial) banks have several key roles: accepting deposits (D), making loans (C), and facilitating investment (A). However, managing the national economy by keeping inflation at a target rate is the responsibility of the central bank. The central bank uses monetary policy, primarily by setting the base interest rate, to achieve this goal.
Common mistakes
Confusing the roles of commercial banks and the central bank. They are distinct entities with different responsibilities.
Practice the full AQA GCSE Economics Paper 2
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