Statement 1: M1 includes only demand deposits and not time deposits
Statement 1: M1 includes only demand deposits and not time deposits.
Statement 2: M1 is the most liquid measure of money supply.
Alternatives:
(a) Both the statements are true
(b) Both the Statements are false
(c) Statement 1 is true and Statement 2 is false
(d) Statement 2 is true and Statement 1 is false
Anurag Pathak Changed status to publish December 15, 2023
Ans – (a)
Statement 1 is true
M1 only includes most liquid assets that are readily available for payment against any debt and obligation.
Thus only demand deposits are included as they are readily available for payment through cheque, demand draft, neft, and rtgs.
Statement 2 is true
M1 is the most liquid measure of money supply as it includes.
1. Currency with public
2. Demand deposits of the public with commercial banks
these two types of money are readily available for payment.
Anurag Pathak Changed status to publish December 15, 2023
