Question

Identify the incorrect feature(s) of money supply (\(M_1\)) from the following: 
(i) It is measured at a point of time. 
(ii) It does not include stock of money held by the government. 
(iii) It is always the currency in the hands of the Central Bank of a nation.

• A. (i) and (ii)
• B. (ii) and (iii)
• C. (ii) only
• D. (iii) only

Hint:

Money supply (\(M_1\)) excludes reserves held by the Central Bank and focuses on the money accessible to the general public.

Answer 1

The Correct Option is D

Money supply (\(M_1\)) comprises currency held by the public and demand deposits. It is a snapshot measure and excludes government holdings. The assertion that \(M_1\) solely represents currency held by the Central Bank is false, as \(M_1\) only reflects money possessed by the public.