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CBSE 2014 Class 12 Economics Delhi Set-1
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Question : 12 of 19
Marks:
+1,
-0
Define money supply and explain its components.
Solution:
Supply of money refers to the total stock of money (in the form of currency notes and coins) held by the people of an economy at a particular point of time. The following are the components of money: (i) Curency component : It includes currency notes and coins which are issued by the monetary Authority of a country, collectively called the currency Component of the money supply, In India, RBI issues the currency notes of various denominations (such as , ) and the Government of India issues currency coins and notes of denomination less than and equal to . (ii) Deposit component : The savings or the current account deposits held by the public in various commercial banks of a country. Apart from the currency notes and coins, the stock of money also includes the Saving Deposits and the Current Account Deposits held by the public in various commercial banks.
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