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True, Demand Deposits of people with commercial banks is one of the components of the money supply. The money supply consists of two components: 1. Currency with public 2. demand deposits of the public with commercial banks
False, It exists under barter exchange because of the difficulty in the simultaneous fulfillment of mutual wants of buyers and sellers. In a barter system, goods are exchanged for goods. The transaction happens when two people want to sell and…
True, As M1 can be directly used for making transactions. Money supply consists of: 1. Currency with the public 2. Demand deposits of the public with the banks. These two components of the money supply are also known as ‘Transaction…
True, As net demand deposits do not include inter-banking claims. Demand deposits with commercial banks consist of: 1. demand deposits by the public 2. Inter-bank deposits M1 is the most liquid form of money supply. It only includes demand deposits…
False, In addition to cash reserves of commercial banks, high-powered money also includes currency held by the public. What is high-powered money? High Powered Money is money produced by the RBI and the government. It consists of two components: 1.…
False, Money Supply is a ‘stock concept’ as it is measured at a particular point of time. Money supply consists of: Currency with public demand deposits of the public with the commercial banks thus when currency (notes and coins) quantity…
True, All commodities are not of equal value and there is absence of common measure of value. Explanation:- In the Barter system, the goods are exchanged with goods. For example, A wants to sell its 1 Kg. rice and wants…
Bank Money is Non-Legal Tender Money (Non-Legal Tender Money/Legal Tender Money). Explanation:- Only currency and coins are considered as legal tender. It means no citizen can refuse to accept the payment in this form. Whereas, Bank money includes demand deposits…
Only Net (gross/net) demand deposits are part of Money Supply. Demand deposits with commercial banks consist of: 1. Demand deposits by the public 2. Inter-banks deposits Only Demand deposits by the public are included in the money supply. The demand…
Bank money refers to the demand deposits created by the Commercial Banks. Explanation:- Demand deposits refer to deposits created by commercial banks. These are the deposits from where the money can be withdrawn on demand. The bank issues the cheques…