Assertion (A): Currency held with the government and banks is not included in the Money Supply.
Assertion (A): Currency held with the government and banks is not included in the Money Supply.
Reason (R): Current can be legally used to make payment of debts or other obligations.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is True but Reason (R) is False.
(d) Assertion (A) is False but Reason (R) is True.
Ans – (b)
Explanation:-
Assertion (A) is true, currency held with the government and banks is not included in the money supply.
Money Supply includes
- Currency and coins held with public
- demand deposits of the public with banks
Reason (R) is also true as currency is the legal tender and can be used to make payment of debts or other obligations.
But Reason (R) is not the correct explanation of Assertion (A).
