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Money And Banking

Question
CBSEENEC12012741
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Define money supply?  

Solution

Meaning of money supply. The supply of money means the total stock of all the forms of money (paper money, coins and demand deposits of banks) in circulation which are held by the public at any particular point of time. Thus money supply is the stock of money in circulation on a specific day. Two points need to be noted in this connection: (i) Supply of money is a stock variable (not flow variable) because it is related to a point of time (not to period of time), (ii) Supply of money always refers to the stock of money held by the public in spendable form. The stock of money held by government and banking system are not included as they are suppliers or producers of money. Thus money supply refers to total volume of money circulating in public at a point of time. Broadly it includes currency held by public and net demand deposits in banks.
Remember, sources of money supply are (i) government (which issues one Rupee note and all other coins), (ii) RBI (which issues currency), and (iii) Commercial banks (which create credit on the basis of demand deposits).

Some More Questions From Money And Banking Chapter

What are the main functions of money? How does money overcome the shortcomings of a barter system?
Or
(a) Define money.
(b)  Describe its functions. What is its main function?
            or
       Briefly explain any two/four functions of money.
            or
        Explain ‘medium of exchange’ function of money.
            or
         Explain the ‘unit of account/measure of value’ function. 
             or
         Explain ‘standard of deferred payment function’ of money.
             or
          Explain the store of value function of money. 
             or
        How has money solved the problems of barter? 
             or
         Describe importance of money in a modern economy.

What is a ‘legal tender’? What is ‘fiat money’?

Distinguish between limited legal tender and unlimited legal tender.

Give functional definition of money.

Give narrow definition and broad definition of money.

Write short notes on the following:
Standard and Token coins.

Write short notes on the following:
Credit money

What is High Powered Money?
or
Write short notes on the following:
High powered money.

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