Money Supply Determinants Quiz

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Questions and Answers

Which of the following is classified as an endogenous determinant of money supply?

Government policies
Global economic trends
Investment (correct)
Reserve Bank of India regulations

What distinguishes exogenous determinants from endogenous determinants of money supply?

Exogenous determinants are external factors affecting the system. (correct)
Exogenous determinants include factors like investment.
Exogenous determinants are influenced by the internal workings of the system.
Exogenous determinants are only quantitative.

Which of the following factors does NOT influence the money supply according to the document?

Demand for money
Government policies
Savings
Local economic conditions (correct)

What type of determinants are represented by factors like RBI regulations?

<p>Exogenous determinants (B)</p> Signup and view all the answers

Why are equations and formulas included in the discussion of money supply?

<p>To represent relationships and models related to money supply. (A)</p> Signup and view all the answers

Flashcards

Endogenous Determinants of Money Supply

Factors determined by the internal operations of a system, such as investment, saving, and money demand.

Exogenous Determinants of Money Supply

Factors determined outside the system itself, such as government policies and central bank actions.

Money Supply

The total amount of money in circulation within an economy.

Reserve Bank of India (RBI)

The central bank of India, responsible for managing the country's monetary policy and influencing money supply.

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Monetary Policy

Actions taken by governments or central banks to influence the money supply.

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Study Notes

Determinants of Money Supply

Money supply is determined by endogenous and exogenous factors
Endogenous determinants are internal factors, impacting money supply within the system
Exogenous determinants are external factors, influencing money supply from outside the system

Endogenous Determinants

These factors are influenced by decisions and actions within the economic system
Example: These factors include
- Demand for money
- Supply of credit
- Reserve requirements
- Interest rates
- People's behaviour

Exogenous Determinants

These factors are determined by external forces outside the economic system
Example factors include
- Government policies (monetary and fiscal)
- Central bank actions (reserve requirements, interest rates)
- External shocks (crises, political instability)
- International capital flows

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Description

Test your knowledge on the factors that determine money supply in the economy. Understand the difference between endogenous and exogenous determinants and their impact on monetary policy. This quiz covers key concepts including demand for money, government policies, and external economic forces.