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Question

Who regulates money supply?

A
Government of India
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B
Reserve Bank of India
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C
Commercial Banks
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D
Planning Commission
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Solution

The correct option is C Reserve Bank of India

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 which includes M1, M2, M3 and M4 measurement of money supply. Every measurement has it own definition with different components varying from most liquid to most rigid form. In India, money supply is regulated by the Reserve bank of India which is the central bank through various fiscal and monetary policies of the government.


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