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Statement should there be only one rate of interest for term deposit of varying duration in banks? Arguments I. No,people will refrain from keeping money for longer duration resulting into reduction of liquidity of the banks. II. Yes, this will be much simple for the common people and they may be encouraged to keep more money in banks.

if only Argument I is strong
if only Argument II is strong
if either I or II is strong
if neither I nor II is strong

Correct Answer: if only Argument I is strong

Explanation:

if we apply the proposed scheme,people will not deposit their money for longer period and thus liquidity with the bank will fall drastically. So, only Argument I holds.

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