M1 includes net demand deposits and not gross demand deposits
True or False with Reasons:
M1 includes net demand deposits and not gross demand deposits.
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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 by the public with commercial banks.
As it is readily available for payment.
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