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O Levels Economics (2281)•2281/12/O/N/24
Question 10 from 2281/12/O/N/24

Explanation

Central banks focus on economic stability

Steps:

  • Recall the primary functions of central banks, such as monetary policy and regulation.
  • Identify that price stability prevents inflation or deflation to support steady growth.
  • Eliminate options unrelated to core mandates like issuing currency or supervising banks.
  • Select the option aligning with official goals, like the Federal Reserve's dual mandate.

Why A is correct:

  • Central banks, per their legal mandates (e.g., Federal Reserve Act), target low and stable inflation to foster economic predictability.

Why the others are wrong:

  • B: Credit cards are issued by commercial banks, not central banks.
  • C: Loans to producers are handled by commercial or development banks, not central banks.
  • D: Savings accounts are provided by retail banks for consumers, not central banks.

Final answer: A

Topic: Monetary policy

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