Student Community
Answer
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 These are the deposits from where the money can be withdrawn on demand.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…
Double coincidence of wants refers to the simultaneous fulfillment of mutual wants of buyers and sellers. Explanation:- Double coincidence of wants refers to the mutual wants of buyers and sellers at the same time. For example:- A wants to sell…
Money Supply refers to total volume of money held by public at a particular point of time in an economy. Explanation:- Money supply refers to money held by public at a particular point of time It has two components: 1.…
Barter Exchange refers to exchange of goods for goods. Explanation:- In the beginning of civilization, human needs were simple and limited. People used to exchange goods with each other to satisfy their wants. Barter Exchange refers to the exchange of…
Two components of money supply are Currency with public and Demand deposits held by commercial banks. Explanation:- Money Supply has two components: Current with public Demand deposits of public with commercial banks