Question

what is component of money supply ​

Answer 1

solution:-

the principal components of money supply are:-

✔️ currency ( notes + coins ) held by the public .

✔️ demand deposits of the people with the commercial Banks.

✔️ other deposits ( demand deposits with RBI of domestic and foreign institutions )

Answer 2

In Macroeconomics or Monetary Economics,money supply can be defined as the overall mathematical value of all the money that is officially in circulation in the economy at a specific point in time.It is basically measured based on several components or criteria.

Explanation:

Major components of money supply:-

1. Currency money available in the economy:This basically refers to the liquid money or currency that people in the economy holds such the actual paper or metal currency held by the people at any specific period in time.Currency money can be used or utilized by the people any time and anywhere to purchase any commodity or service.Therefore,any currency money in circulation contributes to the overall money supply in the economy.
2. Various bank demand deposits:Bank demand deposits basically refers to the storage of liquid money or paper currency in various facilities provided by banks and other financial institutions such as savings and current accounts.Customers having deposit accounts can deposit or withdraw paper currency and use the accounts for any commercial transaction.Therefore,deposit accounts are also considered as different forms of functional money and contributes in the circulation of money in the economy.
3. Long term deposit accounts in banks:Long term deposit account in banks and other financial institutions denote accounts for money or financial deposits for long duration which can generate timely or periodic interest payments to people.Some of the examples of long term deposit accounts include fixed deposit accounts,various investment schemes,mutual fund accounts,recurring deposit accounts etc.