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Accounting & Economics

This case study primarily helps in understanding the estimation/calculation of money supply in an economy. This case also helps in analysing the determinants of money supply and the interrelations between those determinants, apart from understanding various theories relating to money demand and supply along with theories on monetary policies. In economics, money is a broad term that refers to any financial instrument that can fulfil the functions of money – a medium of exchange, a unit of account, a standard of deferred payment, and a store of value. Money supply is usually measured as three escalating categories: M1 (most liquid financial instruments), M2 (equals to M1 + and savings account deposits), and M3 (M2 plus time deposits). It helps in understanding the theories relating to supply for and demand of money in the light of changes in money supply in India in the period 1990 to 2008. The case also helps in analysing income velocity of money with the data provided.

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