Read the passage carefully and answer the questions based on the passage:

Demand and supply of money

Money supply, like money demand, is a stock variable. The total stock of money in circulation among the public at a particular point of time is called money supply. RBI publishes figures for four alternative measures of money supply, viz. M1, M2, M3 and M4.

where, CU is currency (notes plus coins) held by the public and DD is net demand deposits held by commercial banks. The word 'net' implies that only deposits of the public held by the banks are to be included in money supply. The interbank deposits, which a commercial bank holds in other commercial banks, are not to be regarded as part of money supply. M1 and M2 are known as narrow money. M3 and M4 are known as broad money. These measures are in decreasing order of liquidity. M1 is most liquid and easiest for transactions whereas M4 is least liquid of all. M3 is the most commonly used measure of money supply. It is also known as aggregate monetary resources.

Which of the following is not true about currency notes and coins?

They have intrinsic value like gold and silver

The correct answer is Option (3) → They have intrinsic value like gold and silver

• They are fiat money: True. Fiat money is currency that a government has declared to be legal tender, but it is not backed by a physical commodity like gold or silver. Modern currency notes and coins are fiat money.

• There are legal tenders: True. Legal tender is any official medium of payment recognized by law that must be accepted for the payment of a debt. Currency notes and coins are legal tender.

• They have intrinsic value like gold and silver: Not True. Intrinsic value is the value of the material the money is made from (e.g., the value of the gold in a gold coin). Modern currency notes and coins (fiat money) have a face value much higher than the value of the paper or metal they are made of. Therefore, they do not have intrinsic value like the commodity money of the past (like gold or silver coins).

• They cannot be refused by any citizen of the country for settlement of any kind of transaction: True. Since they are legal tender, they must be accepted for the settlement of monetary obligations.