Question

What kinds of measures does RBI adopt in supply of money in the economy?

Answer 1

${\texttt{\huge{\blue{ANSWER :-}}}}$

RBI controls money supply in the market through various tools and measures. CRR - Cash Reserve Ratio is the proportion of total deposits that the banks are required to maintain with the RBI has reserves. By changing this ratio RBI can influence the amount of cash that is available for the banks to lend.

Answer 2

$\huge\mathtt\purple{Answer}$

The money supply is the amount of M1 in the economy (the effective money). The supply of money is determined by the Central Bank through 'monetary policy; the economy then has to make do with that set amount of money.