Question

$M_1$ is also known as transaction money because it can be directly used for making transactions.

• A. True
• B. False

Answer 1

The correct option is A True

$M_1$ consists of currency notes and coins that are in circulaation with public as well as the demand deposits with commercial banks. These can be used by the public directly for any transactions. Hence, $M_1$ is also known as 'Transaction Money'.