Define money supply. Explain M1 measures of money supply used by RBI in India
Solution:
Money supply is the stock of money held by the public at a point of time in an economy.
public includes individual and enterprises of the firm.
Money supply doesnot include the coin and currency held by the commercial bank at cash reserves.
M1 measurement = M1 includes currency held by the public + net demand deposit of the bank + other deposit held with the RBI.
M1 = C + DD + OD
Money supply is the stock of money held by the public at a point of time in an economy.
public includes individual and enterprises of the firm.
Money supply doesnot include the coin and currency held by the commercial bank at cash reserves.
M1 measurement = M1 includes currency held by the public + net demand deposit of the bank + other deposit held with the RBI.
M1 = C + DD + OD