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Read the following… (Class 12 Economics SQP 2026-27, Q2)

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EconomicsCBSE Class 12 · Sample paper, session 2026-27 · 1 mark · MCQ

CBSE Class 12 Economics sample paper 2026-27: question 2

From the official CBSE sample question paper for 2026-27, section A, question 2, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q2 · 1 mark · MCQMoney and Banking

Read the following statements carefully:
Statement 1: M1 measure of money supply constitutes currency and demand deposits held by the public.
Statement 2: Demand deposits are those deposits with commercial banks, that can be withdrawn on demand by the depositors.
In light of the given statements, choose the correct option from the following:

  1. (A)Statement 1 is true and Statement 2 is false.
  2. (B)Statement 1 is false and Statement 2 is true.
  3. (C)Both Statements 1 and 2 are true.
  4. (D)Both Statements 1 and 2 are false.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2026-27.

Hints

Open one hint at a time and try again before the next.

Hint 1

What does the narrow measure M1 include?

Hint 2

Which deposits can be withdrawn at any time?

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Statement 1 is true: M1 = currency held by the public + (net) demand deposits with banks (+ other deposits with RBI).

  2. Statement 2 is true: demand deposits (current and savings accounts) can be withdrawn by the depositor on demand, for example by cheque. Option (C).

    1 mark

Answer: (C) Both Statements 1 and 2 are true.

Where the marks are

  • Definitions of M1 and demand deposits (1 mark)

Revise the chapter

  • Chapter: Money and Banking (notes, formulas, where marks are lost and every past question)
Practise this chapterBoard-style questions from Money and Banking, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2026-27: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.