Assertion (A): Cash held by commercial banks is not part of the money supply.
Reason (R): Money supply counts only money held by the public, and banks are the producers of money, not its users.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Counting banks' cash as well as the deposits it backs would count the same money twice.
R gives the rule that explains A.

Concept: Banks' cash and money supply
Typical timeTypical: 100 s
Your timeYours: —

The rule this testsThe supply of money: M1 to M4

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Ten questions from Money and Its Functions, at your own pace.

Assertion (A): Cash held by commercial banks is not part of the money supply.Reason (R): Money supply counts only money held by the public, and banks are the producers of money, not its users.

Explanation

Assertion (A): Cash held by commercial banks is not part of the money supply.
Reason (R): Money supply counts only money held by the public, and banks are the producers of money, not its users.