Q. Which of the following statements correctly defines the nature of the ‘Stock of Money’ in an economy?

[A] It is a flow concept, as it measures the total value of transactions over a period of time, such as a financial year.

[B] It is a stock concept, as it measures the total quantity of money held by the public at a specific point in time.

[C] It is a purely abstract concept, representing the total capacity of banks to create credit, irrespective of time.

[D] It is measured by the total velocity of currency movement combined with the base money created by the RBI.

Answer: B
Notes:

Explanation:

The Stock of Money refers to the total quantity of money held by the public in an economy at a particular point in time. This makes it a stock concept, as opposed to a flow concept, which is measured over a period of time (e.g., GDP, income, or investment). The money supply measures (M1, M3, etc.) are all fundamentally stock concepts.

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