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.
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.
Show Hint
Money supply (\(M_1\)) excludes reserves held by the Central Bank and focuses on the money accessible to the general public.
Updated On: Jan 29, 2025
- (i) and (ii)
- (ii) and (iii)
- (ii) only
- (iii) only
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The Correct Option is D
Solution and Explanation
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.
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