Which of the following statements regarding money is correct?
I. Money supply is a stock variable.
II. The total stock of money in circulation among the public at a particular point of time is called money supply.

Correct option is A

The correct answer is (a) Both I and II.
· Statement I: Money supply is indeed considered a stock variable because it refers to the total amount of money—cash, coins, and balances in bank accounts—in circulation within an economy at any given point in time.
· Statement II: The definition provided here is accurate for money supply. It encompasses the total stock of money circulating in the public at a particular point in time, including all forms of money like notes, coins, and money held in bank accounts.
Information Booster:
· Understanding Money Supply: Money supply metrics are crucial for central banks when setting monetary policy, as changes in money supply can affect inflation, interest rates, and economic growth.
· Components of Money Supply: Different countries may classify components of money supply differently, typically categorized into M0, M1, M2, M3, etc., based on liquidity.
· Implications: Fluctuations in the money supply can have significant economic implications, influencing purchasing power, investment rates, and overall economic stability.
· Measurement and Impact: Central banks monitor and control the money supply to steer the economy towards desired economic objectives, such as controlling inflation or stimulating growth.