Economics True/False

False.
Explanation:
Stock of money with the suppliers/creators of money is not to be treated as a part of money supply in the country. We know that the government is the supplier of money.

True.
Explanation:
Gross demand deposits include inter-banking claims whereas net demand deposits do not include inter-banking claims. Inter-banking claims are not a part of demand deposits of the people. Hence, only net demand deposits are taken as a part of money supply, not the gross deposits.

True.
Explanation:
An increase in statutory liquidity ratio reduces the excess reserves of commercial banks and limits their credit creating power.

False.Explanation:
M, includes currency notes and coins, demand deposits of commercial and cooperative banks and other deposits. Time deposit is a component of Mz.

False.
Explanation:
Depositors cannot withdraw money as and when needed in case of term deposits because term deposits are always for a specific period of time. These are not chequeable deposits.

True.
Explanation:
Money supply is a 'stock concept' as it is measured at a particular point of time.

True.
Explanation:
As money held by them do not come into actual circulation in the country.

True.Eaplanation:
They are fixed by central bank under quantitative instruments of credit control.

False.
Explanation:
Rise in margin requirements discourages the borrowing capacity of public which decreases the money supply in the economy.

True.
Explanation:
Higher cash deposit ratio would lead to greater cash reserves of the commercial banks implying higher credit creation capacity of the commercial banks.

False.
Explanation:
Reserve Bank of India (RBI) is the principal supplier of money in India.

False.Explanation:
CRR and SLR are not the two components of LRR. These are the two variants cannot be added up to find LRR.

False.
Eaplantion:
It happens under selective credit controls.

True.
Eaplanation:
Demand deposits with the commercial banks are a part of Ml measure of money supply. These are chequeable deposits and therefore, serve like notes and coins.

True.
Explanation:
Basically, money facilitates exchange of goods and services. Accordingly, money is defined as 'anything that acts as a medium of exchange'.

False.
Explantion:
Purchase of securities decreases the reserves of commercial banks, which reduces their crediting power, not the sale of securities in the open market.

True.
Explanation:
Both primary and secondary deposits are demand deposits because these can be withdrawn on demand by writing cheques.

False.
Explanation:
Money supply in the economy includes notes and coins with the people as well as demand deposits with the banks.