Statement: Should there be only one rate of interest for term deposits of varying durations in banks?Arguments:No. People will refrain from keeping money for longer duration resulting into reduction of liquidity level of banks.Yes. This will be much simple for the common people and they may be encouraged to keep more money in banks.

Statement: Should there be only one rate of interest for term deposits of varying durations in banks?
Arguments:
No. People will refrain from keeping money for longer duration resulting into reduction of liquidity level of banks.
Yes. This will be much simple for the common people and they may be encouraged to keep more money in banks.

Only argument I is strong

Only argument II is strong

Either I or II is strong

Neither I nor II is strong

Explanation:

Answer: Option A
Clearly, the proposed scheme would discourage people from keeping deposits for longer durations (the rate of interest being the same for short durations) and not draw in more funds. So, only argument I holds.