Which of the following measures would result in an increase in the money supply in the economy Purch...........

Economic Affairs Money Supply and Monetary Policy

Which of the following measures would result in an increase in the money supply in the economy?

Select the correct answer using the codes given below:

1only

2 and 4 only

1 and 3

2, 3 and 4

S1 is correct because when govt puchases the security, it gives out money. Therefore Money Supply increases.

S2 is incorrect because depositing money in banks will take away money from public. Therefore Money Supply decreases.

S3 is correct because when govt is borrowing by central bank it is intended for expansionary fiscal policy

S4 is incorrecrt because by selling securites, govt extracts money from market, thereby decreasing money supply.

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