The currency held by the public is Rs 50 crore, the demand deposits are ₹60 crore and the term deposits are ₹40 crore. Calculate money supply using M1 measure of money supply.
Answer & explanation
Correct answer: option 3
The correct answer is option (3) : ₹110 crore
M1 = CU + DD where, CU is currency (notes plus coins) held by the public and DD is net demand deposits held by commercial banks.
M1= 50+ 60 = Rs 110 Cr