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In a hypothetical economy, Mr. Neeraj has deposited ₹100 in the bank. If it is assumed that there is no other currency circulation in the economy, then the total money supply in the economy will be ________________.
- a)zero
- b)₹100
- c)not defined
- d)₹120
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
In a hypothetical economy, Mr. Neeraj has deposited100 in the bank. If...
If money deposited in the bank is `100, and no other money is circulating in the economy, then the total money supply in the economy is ₹100 because money supply can be defined as total stock of money available in the economy at a given point of time in the form of currency and demand deposits.
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In a hypothetical economy, Mr. Neeraj has deposited100 in the bank. If...
The total money supply in the hypothetical economy will be 100.
Explanation:
- In this scenario, Mr. Neeraj has deposited 100 in the bank. This means that the bank now has 100 in reserves.
- The money supply in an economy consists of two components: currency in circulation and demand deposits. Currency in circulation refers to the physical money that is available for use, while demand deposits are funds held in bank accounts that can be withdrawn on demand.
- Since there is no other currency circulation in the economy, the only component of the money supply is the deposit made by Mr. Neeraj.
- The deposit of 100 in the bank represents an increase in demand deposits. This means that the money supply in the economy has increased by 100.
- Therefore, the total money supply in the economy is 100, which is the amount deposited by Mr. Neeraj.
- Option B, which states that the total money supply is 100, is the correct answer.
To summarize:
- Mr. Neeraj's deposit of 100 in the bank increases the demand deposits in the economy.
- Since there is no other currency circulation, the total money supply is equal to the amount deposited by Mr. Neeraj.
- Therefore, the correct answer is option B, which states that the total money supply in the economy is 100.
Explanation:
- In this scenario, Mr. Neeraj has deposited 100 in the bank. This means that the bank now has 100 in reserves.
- The money supply in an economy consists of two components: currency in circulation and demand deposits. Currency in circulation refers to the physical money that is available for use, while demand deposits are funds held in bank accounts that can be withdrawn on demand.
- Since there is no other currency circulation in the economy, the only component of the money supply is the deposit made by Mr. Neeraj.
- The deposit of 100 in the bank represents an increase in demand deposits. This means that the money supply in the economy has increased by 100.
- Therefore, the total money supply in the economy is 100, which is the amount deposited by Mr. Neeraj.
- Option B, which states that the total money supply is 100, is the correct answer.
To summarize:
- Mr. Neeraj's deposit of 100 in the bank increases the demand deposits in the economy.
- Since there is no other currency circulation, the total money supply is equal to the amount deposited by Mr. Neeraj.
- Therefore, the correct answer is option B, which states that the total money supply in the economy is 100.
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In a hypothetical economy, Mr. Neeraj has deposited100 in the bank. If it is assumed that there is no other currency circulation in the economy, then the total money supply in the economy will be ________________.a)zerob)100c)not definedd)120Correct answer is option 'B'. Can you explain this answer? for Class 12 2025 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about In a hypothetical economy, Mr. Neeraj has deposited100 in the bank. If it is assumed that there is no other currency circulation in the economy, then the total money supply in the economy will be ________________.a)zerob)100c)not definedd)120Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Class 12 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In a hypothetical economy, Mr. Neeraj has deposited100 in the bank. If it is assumed that there is no other currency circulation in the economy, then the total money supply in the economy will be ________________.a)zerob)100c)not definedd)120Correct answer is option 'B'. Can you explain this answer?.
In a hypothetical economy, Mr. Neeraj has deposited100 in the bank. If it is assumed that there is no other currency circulation in the economy, then the total money supply in the economy will be ________________.a)zerob)100c)not definedd)120Correct answer is option 'B'. Can you explain this answer? for Class 12 2025 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about In a hypothetical economy, Mr. Neeraj has deposited100 in the bank. If it is assumed that there is no other currency circulation in the economy, then the total money supply in the economy will be ________________.a)zerob)100c)not definedd)120Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Class 12 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In a hypothetical economy, Mr. Neeraj has deposited100 in the bank. If it is assumed that there is no other currency circulation in the economy, then the total money supply in the economy will be ________________.a)zerob)100c)not definedd)120Correct answer is option 'B'. Can you explain this answer?.
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In a hypothetical economy, Mr. Neeraj has deposited100 in the bank. If it is assumed that there is no other currency circulation in the economy, then the total money supply in the economy will be ________________.a)zerob)100c)not definedd)120Correct answer is option 'B'. Can you explain this answer?, a detailed solution for In a hypothetical economy, Mr. Neeraj has deposited100 in the bank. If it is assumed that there is no other currency circulation in the economy, then the total money supply in the economy will be ________________.a)zerob)100c)not definedd)120Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of In a hypothetical economy, Mr. Neeraj has deposited100 in the bank. If it is assumed that there is no other currency circulation in the economy, then the total money supply in the economy will be ________________.a)zerob)100c)not definedd)120Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
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