{"id":91779,"date":"2025-06-01T11:05:30","date_gmt":"2025-06-01T11:05:30","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=91779"},"modified":"2025-06-01T11:05:30","modified_gmt":"2025-06-01T11:05:30","slug":"if-you-withdraw-%e2%82%b9-100000-in-cash-from-your-demand-deposit-account-at","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/if-you-withdraw-%e2%82%b9-100000-in-cash-from-your-demand-deposit-account-at\/","title":{"rendered":"If you withdraw \u20b9 1,00,000 in cash from your Demand Deposit Account at"},"content":{"rendered":"

If you withdraw \u20b9 1,00,000 in cash from your Demand Deposit Account at your bank, the immediate effect on aggregate money supply in the economy will be<\/p>\n

[amp_mcq option1=”to reduce it by \u20b9 1,00,000″ option2=”to increase it by \u20b9 1,00,000″ option3=”to increase it by more than \u20b9 1,00,000″ option4=”to leave it unchanged” correct=”option4″]<\/p>\n

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This question was previously asked in<\/div>\n
UPSC IAS – 2020<\/div>\n<\/div>\n
Download PDF<\/a>Attempt Online<\/a><\/div>\n<\/div>\n
\nMoney supply (specifically M1) is defined as the sum of currency in circulation (C) and demand deposits (DD) held by the public. When you withdraw \u20b91,00,000 in cash from your demand deposit account, there is a decrease in the demand deposits component by \u20b91,00,000 and a corresponding increase in the currency in circulation component by \u20b91,00,000.
\n<\/section>\n
\nThe total amount of money defined as M1 (Currency + Demand Deposits) remains unchanged; only the form in which the money is held by the public changes from demand deposits to physical currency.
\n<\/section>\n
\nThe transaction is a transfer of funds between two components of the money supply (M1). If the definition of money supply included broader measures like M2, M3 etc., which include time deposits or other assets, the effect might be different depending on the nature of the withdrawal account and what the money is subsequently used for (e.g., if it shifts into a different asset type). However, in the context of a simple cash withdrawal from a demand deposit account affecting aggregate money supply (M1), the net effect is zero.
\n<\/section>\n","protected":false},"excerpt":{"rendered":"

If you withdraw \u20b9 1,00,000 in cash from your Demand Deposit Account at your bank, the immediate effect on aggregate money supply in the economy will be [amp_mcq option1=”to reduce it by \u20b9 1,00,000″ option2=”to increase it by \u20b9 1,00,000″ option3=”to increase it by more than \u20b9 1,00,000″ option4=”to leave it unchanged” correct=”option4″] This question … <\/p>\n

Detailed SolutionIf you withdraw \u20b9 1,00,000 in cash from your Demand Deposit Account at<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1092],"tags":[1288,1120,1190],"class_list":["post-91779","post","type-post","status-publish","format-standard","hentry","category-upsc-ias","tag-1288","tag-economic-development","tag-money-banking","no-featured-image-padding"],"yoast_head":"\nIf you withdraw \u20b9 1,00,000 in cash from your Demand Deposit Account at<\/title>\n<meta name=\"description\" content=\"Money supply (specifically M1) is defined as the sum of currency in circulation (C) and demand deposits (DD) held by the public. When you withdraw \u20b91,00,000 in cash from your demand deposit account, there is a decrease in the demand deposits component by \u20b91,00,000 and a corresponding increase in the currency in circulation component by \u20b91,00,000. The total amount of money defined as M1 (Currency + Demand Deposits) remains unchanged; only the form in which the money is held by the public changes from demand deposits to physical currency.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/if-you-withdraw-\u20b9-100000-in-cash-from-your-demand-deposit-account-at\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"If you withdraw \u20b9 1,00,000 in cash from your Demand Deposit Account at\" \/>\n<meta property=\"og:description\" content=\"Money supply (specifically M1) is defined as the sum of currency in circulation (C) and demand deposits (DD) held by the public. When you withdraw \u20b91,00,000 in cash from your demand deposit account, there is a decrease in the demand deposits component by \u20b91,00,000 and a corresponding increase in the currency in circulation component by \u20b91,00,000. The total amount of money defined as M1 (Currency + Demand Deposits) remains unchanged; only the form in which the money is held by the public changes from demand deposits to physical currency.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/if-you-withdraw-\u20b9-100000-in-cash-from-your-demand-deposit-account-at\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2025-06-01T11:05:30+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"If you withdraw \u20b9 1,00,000 in cash from your Demand Deposit Account at","description":"Money supply (specifically M1) is defined as the sum of currency in circulation (C) and demand deposits (DD) held by the public. When you withdraw \u20b91,00,000 in cash from your demand deposit account, there is a decrease in the demand deposits component by \u20b91,00,000 and a corresponding increase in the currency in circulation component by \u20b91,00,000. The total amount of money defined as M1 (Currency + Demand Deposits) remains unchanged; only the form in which the money is held by the public changes from demand deposits to physical currency.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/if-you-withdraw-\u20b9-100000-in-cash-from-your-demand-deposit-account-at\/","og_locale":"en_US","og_type":"article","og_title":"If you withdraw \u20b9 1,00,000 in cash from your Demand Deposit Account at","og_description":"Money supply (specifically M1) is defined as the sum of currency in circulation (C) and demand deposits (DD) held by the public. When you withdraw \u20b91,00,000 in cash from your demand deposit account, there is a decrease in the demand deposits component by \u20b91,00,000 and a corresponding increase in the currency in circulation component by \u20b91,00,000. The total amount of money defined as M1 (Currency + Demand Deposits) remains unchanged; only the form in which the money is held by the public changes from demand deposits to physical currency.","og_url":"https:\/\/exam.pscnotes.com\/mcq\/if-you-withdraw-\u20b9-100000-in-cash-from-your-demand-deposit-account-at\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2025-06-01T11:05:30+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/if-you-withdraw-%e2%82%b9-100000-in-cash-from-your-demand-deposit-account-at\/","url":"https:\/\/exam.pscnotes.com\/mcq\/if-you-withdraw-%e2%82%b9-100000-in-cash-from-your-demand-deposit-account-at\/","name":"If you withdraw \u20b9 1,00,000 in cash from your Demand Deposit Account at","isPartOf":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#website"},"datePublished":"2025-06-01T11:05:30+00:00","dateModified":"2025-06-01T11:05:30+00:00","author":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209"},"description":"Money supply (specifically M1) is defined as the sum of currency in circulation (C) and demand deposits (DD) held by the public. 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