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‘Money supply is a stock variable.’(a) Define the concept of money supply.(b) Name the four alternative measure of money supply.(c) Classify them into narrow money and broad money. |
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Answer» (a) Money supply consists of currency notes and coins issued by the monetary authority of the country. (b) The total stock of money in circulation among the public at a particular point of time is called money supply. RBI publishes figures for four alternative measures of money supply, viz. M1, M2, M3 and M4. They are defined as follows. (c) M1 and M2 are narrow money. M3 and M4 are broad money
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