DATE : 24-06-2023

ASSIGNMENT NO : 2
SUBJECT : MACRO ECONOMICS
CLASS : XII (2023-24)
TOPIC : MONEY

1.The component not included in the money supply.

A. Currency with the private individuals
B. Currency with the business farms
C. Stock of gold with RBI
D. All of these

2. RBI publishes figures for _____ alternative measure of money supply

A. M 1
B. M 2
C. M 3
D. All of these

3. Match the following items given in column A with those in column B

COLUMN A COLUMN B

1. Money Supply A. Against which checks are issued

2. Demand Deposits B. Fiat money

3. Legal tender money C. Fiduciary money

4. Non legal tender money D. Stock variable

4. Money supply does not include money creating units or producers of money.
Defend or refute

5. Assertion:
Anything will be called money ,if the law of the country proclaims it to be money. It will be
a
commonly accepted measure of value as it will be endowed with legal tender power
( Limited
and unlimited). Thus money is what laws says it is.

Reason :
Limited legal tender can be accepted up to a certain maximum limit. For example in India
coins are up. to ₹1000 on your (as per Coinage Bill,August 2011) Can be accepted legally in
payment All the currency notes have unlimited legal tender.

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6.Statement-1: The total liability of Monetary authority( RBI) is called high powered money
Statement-2; High powered money includes currency held by the public only

7. Read the following text and data and answer the questions given below :

Money plays a crucial role in the smooth functioning of the economy. Money supply is
considered as a very important tool to control other macroeconomic variables.
Central bank and commercial banks are the two main sources of money supply.
Measurement of money supply is an important task performed by the central bank.

RBI in its press release on 22 September, 2021 has released data on money supply for the
fortnight ended 10 September, 2021 as follows :

8. The value of money supply in the economy is Rs. ____ crores.

(a)1,30,78,148
(b) 1,93,99,596
(c) 47,78,148
(d) 47,31,426

9. Money supply is a_____ variable, measured at a point of time.

(a) stock
(b) flow
(c) both stock and flow
(d) neither stock nor flow

10.Demand deposits are

(a) chequable deposits

(b) non-chequable deposits

(c) fixed deposits

(d) recurring deposits

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11. Suppose primary deposits are Rs 2,000 crores and reserve deposit ratio is 10%. The
money created by commercial banks would be Rs.____ crores in the economy.

(a)10,000
(b) 20,000
(c) 2,000
(d) 1,000

12.Read the following statements carefully - Assertion (A) and Reason (R) and choose one of
the correct alternatives given below :

Assertion (A). Money supply includes money held by all the financial institutions.
Reason (R). Money held by the government does not come into circulation.

13. ______releases data on money supply in India.

(a) Reserve Bank of India

(b) Government of India

(c) State Bank of India

(d) Commercial bank

14.Calculate M1,M2,M3 and M4 measures of money supply using the following data;

Particulars Rs. In lacs

1.Currency and coins with the public 26,000

2.Demand deposits of commercial banks 16,000

3. Other deposits with RBI 24,000

4.Net time deposits with commercial banks 10,000

5.Total deposits with post offices 14,000

15. What is the difference between money and high powered money?

16.Explain Standard of deferred payment function of money. Can you imagine business
activities of today without this function of money?

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