Question:

Identify the incorrect feature(s) of money supply (M1M_1) from the following:
[(i)] It is measured at a point of time. 
[(ii)] It does not include stock of money held by the government. 
[(iii)] It is always the currency in the hands of the Central Bank of a nation.

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For money supply questions, focus on components like currency, demand deposits, and public holdings.
Updated On: Jan 30, 2025
  • (i) and (ii)
  • (ii) and (iii)
  • (ii) only
  • (iii) only
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The Correct Option is D

Solution and Explanation

M1M_1 is measured at a point of time, so (i) is correct. M1M_1 includes currency held by the public, demand deposits, and other deposits with the central bank. It does not exclude stock of money held by the government, making (ii) correct. M1M_1 also includes currency in circulation and not just currency held by the Central Bank, so (iii) is incorrect.
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