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Question
What is money supply?
Solution
Money supply means the total amount of money in an economy. It refers to the amount of money that is in circulation in an economy at any given time. Money supply plays a crucial role in the determination of price level and interest rates. Money supply viewed at a given point of time is stock and over a period of time, it is a flow.
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RELATED QUESTIONS
State the meaning and components of the money supply.
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State any two components of the M1 measure of the money supply.
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Money supply in India may increase if, ______
- Reserve Bank of India (RBI) injects more money in circulation.
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Read the following statements carefully:
Statement 1: Money supply (M1) in India does not include ‘demand deposits’ with commercial banks.
Statement 2: Money supply (M1) refers to, assets available with the Commercial Banks during a particular period of time.
In the light of the given statements, choose the correct alternative.
