BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Currency component
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Deposit component
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Treasury bill with public
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Both A and B
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Detailed explanation-1: -Both the currency in circulation and the deposits with banks are key components of the money supply.
Detailed explanation-2: -The main source of money supply in India is in the form of bank deposits and cash. RBI monitors the money supply in the economy and has the power to print and issue currency. Base money is the money issued by the Central Bank.
Detailed explanation-3: -Coins, paper currency and deposits are the components of money supply in India.
Detailed explanation-4: -The three different components of M1 are Currency and coins with public, Demand deposits of Commercial Banks, and Other deposits with RBI. All of these components can be easily used as a medium of exchange; therefore, it is the most liquid measure of the money supply.