Money Supply and Demand

Q. Explain the relationship between money supply and prices.

Q. Which of the following allows customers to withdraw money at any time and on an immediate basis?

1. M1
2. M2
3. M3
4. M4

Q. The money in M3 and M4 is termed as ___________ as it can be used only after a particular period of time, and it cannot be withdrawn or used by the people immediately.

1. broad money
2. narrow money
3. thick money
4. thin money

Q. Why do demand deposits, along with currency, constitute money in the modem economy?

1. Demand deposits are lightweight.
2. Demand deposits are widely accepted as a means of payment.
3. Demand deposits are relatively newer than coins.

4. Demand deposits are unsafe for use.

Q. Which of the following is correct with respect to the fourth stage of money supply?

1. M4 = M1 + Time deposits
2. M4 = M1 + Total deposits with Post Office Savings Bank
3. M4 = M1 + Time deposits + Total deposits with Post Office Savings Bank
4. M4 = M3 + Time deposits

Q. As money can be easily withdrawn in M1 and M2, it is known as , whereas the money represented by M3 and M4 is called .

1. broad money
2. money supply
3. money circulation
4. narrow money

Q. Which is the most readily available form of money?

1. M1
2. M2
3. M3
4. M4

Q. Choose the correct statement in relation to money supply.

1. The difference between M1 and M2 is post office deposits.
2. The difference between M3 and M4 is savings deposits with Post Office Savings Bank.
3. The difference between M1 and M2 is time deposits.
4. The difference between M1 and M3 is time deposits.