Question

The word 'net' implies that ______ is to be included in the money supply.

Options

• Only deposits of the public held by the banks

• Savings deposits with Post Office savings banks

• Total deposits with Post Office savings organizations

• None of these

Answer 1

The word 'net' implies that Only deposits of the public held by the banks are to be included in the money supply.

Explanation:

In the money supply, CU refers to public currency (notes and coins) and DD refers to commercial banks' net demand deposits. The term 'net' implies that only public deposits held by banks are to be included in the money supply. Interbank deposits held by a commercial bank in other commercial banks are not considered part of the money supply.