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Question
Which monetary aggregate stresses on the medium of exchange function of money?
Which monetary aggregate stresses on the medium of exchange function of money?
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Solution
The correct option is A M1
Money supply refers to the total stock of money of all types ( currency as well as demand deposits) held by the people of a country at a given point of time.
In India, money supply is measured in several ways among which M1 is a type of measurement that measures the money as a medium of exchange function. M1= C+ DD+ OD where, C: It refers to currency held by public in terms of coins and paper notes.DD: It refers demand deposits of the people with the commercial bank.OD: These includes other deposits with public financial institution, foreign central banks and international financial institution.
Money supply refers to the total stock of money of all types ( currency as well as demand deposits) held by the people of a country at a given point of time.
In India, money supply is measured in several ways among which M1 is a type of measurement that measures the money as a medium of exchange function.
M1= C+ DD+ OD
where,
C: It refers to currency held by public in terms of coins and paper notes.
DD: It refers demand deposits of the people with the commercial bank.
OD: These includes other deposits with public financial institution, foreign central banks and international financial institution.
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