Assertion (A): Central Bank and Commercial Banks have distinct roles in economy.

Reason (R): Central Bank controls money supply and sets policy. Commercial Banks take deposits and make loans to customers.

1. A is true but R is false
2. A is false but R is true
3. Both A and R are true and R explains A
4. Both A and R are true but R does not explain A

Both A and R are true and R explains A

Reason — The Assertion is TRUE — central bank and commercial banks indeed perform distinct roles in the economy. The Reason is also TRUE and clearly explains the distinction: the central bank controls the money supply, issues currency, and sets monetary policy, while commercial banks take deposits from the public and make loans to customers. Hence, R correctly explains A.