Question : Regarding the money supply situation in India in 2014-15, it can be said that the:
Option 1: Currency with the public is inconvertible only
Option 2: Currency with the public is less than the deposits with the banks
Option 3: Currency with the public is more than the deposits with the banks
Option 4: Currency with the public is almost equal to the deposits with the banks
Correct Answer: Currency with the public is less than the deposits with the banks
Solution : The correct answer is the currency with the public is less than the deposits with the banks .
The cash in circulation is indeed smaller than the deposits in Indian banks. People are increasingly adopting electronic payments, such as debit cards, credit cards and mobile wallets, to make purchases. As a result, they have less cash in hand.
The supply of money is a dynamic and influential factor in the economic landscape. Its management is a key responsibility of central banks and policymakers, impacting interest rates, inflation levels, and overall economic stability. As economies evolve, so does the nature of the money supply, making it imperative for a nuanced understanding of its components and their interplay. A well-regulated and stable money supply is essential for fostering sustainable economic growth and maintaining financial equilibrium.
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