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Theories and Money supply in India, Indian Financial System Video Lecture | Indian Financial System - B Com

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FAQs on Theories and Money supply in India, Indian Financial System Video Lecture - Indian Financial System - B Com

1. What is the money supply in India?
Ans. The money supply in India refers to the total amount of money available in the economy at a given point in time. It includes currency notes and coins in circulation, demand deposits with banks, and other forms of money held by the public.
2. How does the Indian financial system work?
Ans. The Indian financial system comprises various institutions, such as banks, non-banking financial companies (NBFCs), insurance companies, stock exchanges, and regulatory bodies like the Reserve Bank of India (RBI). These institutions facilitate the flow of funds between savers and borrowers, provide financial services, and regulate the financial markets.
3. What are the theories related to money supply in India?
Ans. There are several theories related to money supply in India. One of the prominent theories is the Quantity Theory of Money, which states that the money supply and price level are directly proportional. Another theory is the Keynesian Theory, which emphasizes the role of aggregate demand in determining the level of money supply and its impact on the economy.
4. How is the money supply regulated in India?
Ans. The money supply in India is regulated by the Reserve Bank of India (RBI). The RBI uses various tools of monetary policy, such as open market operations, reserve requirements, and repo rate adjustments, to control the money supply and manage inflation. Additionally, the RBI also monitors the banking system and ensures the stability and integrity of the financial system.
5. What is the role of money supply in the Indian economy?
Ans. The money supply plays a crucial role in the Indian economy. It affects various economic variables, including inflation, interest rates, and economic growth. By regulating the money supply, the central bank aims to maintain price stability, promote economic growth, and ensure the smooth functioning of the financial system.
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