Practicing Success
Read the following case study paragraph carefully and answer the questions based on the same. The central bank of India (Reserve Bank of India) is the apex institution that controls the entire financial market. It's one of the major function is to maintain the reserve of foreign exchange. Also, it intervenes in the foreign exchange market to stabilise the excessive fluctuations in the foreign exchange rate. In other words, it is the central bank's job to control a country economy through monetary policy. |
Money supply is a ________ concept. |
Flow Stock Supply Ratio of flow and stock |
Stock |
The answer is Option 3: Stock.
Money supply is the total amount of money in circulation in an economy at a given point in time. It is a stock concept, meaning that it is a measure of the amount of money that exists at a particular moment. Flow, is incorrect because money supply is not a flow concept. A flow concept is a measure of something that changes over time, such as the flow of goods and services in an economy. |