CBSE Class 12-commerce Macroeconomics Commercial Banks & Money Creation Process

Learn about the creation of money and about commercial banks from the CBSE Class 12 Commerce Economics chapter Money and Banking by referring to the revision notes, sample papers, past years’ papers etc. at TopperLearning.

Money supply will change if the value of any of its components such as CU, DD or time deposits change. We use the most liquid definition of money, viz. M1 = CU + DD, as the measure of money supply in the economy. Various actions of the monetary authority, RBI and commercial banks are responsible for changes in the values of these items. The preference of the public for holding cash balances vis-a-vis deposits in banks also affect the money supply.