Money Supply and Inflation
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Indian Economy and Indian Financial System — JAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
Which function of money is being used when a person keeps surplus cash idle for months intending to use it for a future purchase?
This is the store of value function of money, which allows purchasing power to be saved and used at a later point in time.
What is the primary function of money when it is used to price goods and services in an economy?
Measure of value (unit of account)
What is money supply in the context of macroeconomics?
Money supply refers to the total stock of money circulating in an economy at a given point in time, including currency and deposits.
Which function of money is directly reflected when a contract specifies fixed instalments payable over future years?
Standard for deferred payments
What are the four standard measures of money supply used by the Reserve Bank of India?
The RBI measures money supply using M0, M1, M2, and M3, each representing progressively broader definitions of money.
How is Currency with the public calculated as per the RBI's money supply framework?
Currency in circulation MINUS cash held by banks
What does M1 (narrow money) consist of in India?
M1 consists of currency with the public plus demand deposits with the banking system plus other deposits with the RBI.
What are the three components of Narrow Money (M1) as defined by the RBI?
Currency with the public + Demand deposits with banks + Other deposits with the RBI
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