Question

Identify the incorrect feature(s) of money supply (\( M_1 \)) from the following: 
It is measured at a point of time. 
It does not include stock of money held by the government. 
It is always the currency in the hands of the Central Bank of a nation. 
 

• A. (i) and (ii)
• B. (ii) and (iii)
• C. (ii) only
• D. (iii) only

Hint:

Remember that \( M_1 \) represents the most liquid components of money, excluding reserves held by the Central Bank.

Answer 1

The Correct Option is D

Analyzing the features.
(i) \( M_1 \) is measured at a specific point in time, which is correct.
(ii) \( M_1 \) excludes money held by the government, which is correct.
(iii) \( M_1 \) is not the currency held by the Central Bank; rather, it includes currency with the public, demand deposits with banks, and other liquid instruments. This statement is incorrect.
Conclusion.
The incorrect feature is \( \mathbf{(iii)} \), so the answer is \( \mathbf{(D)} \).