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:
Answer & explanation
Correct answer: option 3
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."