Question

Identify the incorrect feature(s) of money supply (\(M_1\)) 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.

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

Hint:

For money supply questions, focus on components like currency, demand deposits, and public holdings.

Answer 1

The Correct Option is D

\(M_1\) is measured at a point of time, so (i) is correct. \(M_1\) 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. \(M_1\) also includes currency in circulation and not just currency held by the Central Bank, so (iii) is incorrect.