The correct statements regarding money supply are: (A) and (C)
Here's why:
- (A) Money supply is a stock concept. This statement is correct. Money supply refers to the total amount of money available in an economy at a specific point in time. It's like a snapshot of the available financial resources, similar to how the stock market measures shares available at a particular moment.
- (B) Money supply is a flow concept. This statement is incorrect. Money supply is not a flow concept like income or expenditure, which measure movement or change over time. Money supply represents a static picture of the existing financial resources at a given point.
- (C) Money supply is the currency (cash and coins) with the public and demand deposit in banks. This statement is correct. This definition encompasses the two main components of readily available money: physical currency in circulation and easily accessible bank deposits that can be readily converted into cash.
- (D) Money supply is the currency held with banks. This statement is incorrect. Money supply includes currency held by the public, not just what's within the banking system. Banks hold reserves and other assets, but the money supply focuses on the readily accessible funds available for transactions in the broader economy.
- (E) Money supply is the concept of real flow. This statement is incorrect. Money supply, as mentioned earlier, is a stock concept, not a flow concept. Real flow refers to the physical movement of goods and services, which is distinct from the monetary representation of value associated with the money supply.
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