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:

Money supply (\(M_1\)) excludes reserves held by the Central Bank and focuses on the money accessible to the general public.

Answer 1

The Correct Option is D

Money supply (\(M_1\)) includes currency in circulation and demand deposits with the public. It is measured at a point in time, and it excludes money held by the government. The statement that \(M_1\) is always the currency in the hands of the Central Bank is incorrect because \(M_1\) only accounts for money held by the public.