Read the following article and answer the questions given below:
India's total Money Supply (M3) stood at ₹17804885 crores as on October 23rd
2020, recording a rise of 11.60% over the same time last year. Currency with the
public stood at ₹2619612, up 21.2% over the year.
Demand deposits with banks were up 10% at ₹1625734 crores. Time deposits with
banks were also up 10% at ₹13518822 crores. The bank credit to commercial sector
rose 5.2% on year to
₹10999604 crores.
Money supply in the economy has increased over the months. We can look at
money supply from the component side and the sources side. One of the ways of
measuring money supply is M3, which is a sum of the currency with the public, the
demand deposits with the banking system, which include current deposits and
savings deposits, the time deposits with the banking system, such as fixed deposits,
recurring deposits, and other deposits of RBI. The currency with the public has
grown by more than 21% since June and so have bank deposits. This has led to M3
growing by over 12% since June.
Heightened uncertainty in India caused by the coronavirus pandemic has led to a
surge in currency in circulation as people hoard cash or park money in accessible
deposits to safeguard themselves against salary cuts or job losses.
Foreign money continuously keeps coming into India, leading to an increase in
demand for the rupee against the dollar. To prevent the rupee from appreciating,
RBI sold rupees and bought dollars, adding to the increase in M3.
19. Money supply in the economy has increased over 5 months since June due to:
a. Public holding cash for transaction and precautionary
b. Inflow of foreign exchange
c. Uncertainty caused by corona virus pandemic
d. All of these
20. Sum of currency with public, demand deposits and time deposits with banks is
measure of money supply.
a. M1
b. M2
c. M3
d. None of the above
21. and are the components of money supply.
a. Currency held with public, fixed deposits
b. Currency held with public, demand deposits
c. Coins, paper currency
d. Goods, services
22. Money supply refers to the total of money in circulation in the
economy which can be directly used for transactions.
a. Stock
b. Flow
c. Depreciation
d. Value
Answers
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Answer:
19.uncertainty caused by corona virus pandemic
20.M3
21.currency held with public,demand fixed
22.flow
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