CBSE 2023 Class 12 Economics Delhi Set 1

Question : 9

Total: 49

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.

Statement 1 is true and Statement 2 is false.
Statement 1 is false and Statement 2 is true.
Both statements 1 and 2 are true.
Both statements 1 and 2 are false.

Solution:

(d) Both statements 1 and 2 are false.
Explanation: M1 includes demand deposits or chequable deposits with commercial banks. M1 does not include assets available with the commercial banks during a particular period of time. M1 money supply includes the most liquid form of money in an economy. It consists of total amount of principal currency in circulation as well as the funds held in demand deposits at commercial banks and other financial institutions.

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