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Home Questions ZWXCCHW84R
Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Money and Banking

Question:

Read the following statements - Assertion (A) and Reason (R):
Assertion: M1 money supply includes the most liquid measure of money supply.
Reasoning: Money created by central bank is called bank money.
From the given alternatives choose the correct one:

Options:

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

Assertion (A) is true but Reason (R) is false.

Assertion (A) is false but Reason (R) is true.

Correct Answer:

Assertion (A) is true but Reason (R) is false.

Explanation:

The correct answer is Option 3: Assertion (A) is true but Reason (R) is false.

Assertion: M1 money supply includes the most liquid measure of money supply. This is correct. M1 money supply is indeed the most liquid measure of money supply. It includes currency in circulation, demand deposits, and other liquid assets.
Reasoning: Money created by central bank is called bank money. This is incorrect. Money created by the central bank is typically referred to as "base money" or "high-powered money," not "bank money."

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