Question

Assertion (A): Notes and Coins are the only source of money supply in the economy.

Reason (R): Demand deposits with commercial bank is also a component of money supply.

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.

Answer 1

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

Explanation:

The first assertion is false. Coins and banknotes are just one source of the money supply; additional sources include demand deposits with the RBI, savings deposits with Post Office Savings Bank, time deposits with banks, total deposits with Post Office Savings Bank, and so on.