Q. Consider the following statements with respect to’ money supply’ in the economy:
Which of the statements given above is/are correct?
A
1 only
Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses
B
2 only
No worries! We‘ve got your back. Try BYJU‘S free classes today!
C
Both 1 and 2
No worries! We‘ve got your back. Try BYJU‘S free classes today!
D
Neither 1 nor 2
No worries! We‘ve got your back. Try BYJU‘S free classes today!
Open in App
Solution
The correct option is A 1 only Explanation:
Statement 1 is correct: Total amount of money circulating at a particular time in the form of currency, printed notes, in deposits of the banks and other liquid assets.
Statement 2 is incorrect: In the banking parlance, M1 is called Narrow money and M3 is called Broad money. M1 has the highest liquidity and banks cannot lend money from this pool.