Which of the following measures would result in an increase in the money supply in the economy?<br/>1. Purchase of government securities from the public by the Central Bank.<br/>2. Deposit of currency in commercial banks by the public.<br/>3. Borrowing by the government from the Central Bank.<br/>4. Sale of government securities to the public by the Central Bank.<br/><br/>Select the correct answer using the codes given below:

1. Purchase of government securities from the public by the Central Bank — This is an open market purchase; the Central Bank pays the public/banks, injecting liquidity. Correct.

2. Deposit of currency in commercial banks by the public — This shifts money from currency with the public to bank deposits; it changes composition, not total money supply by itself. Incorrect.

3. Borrowing by the government from the Central Bank — This monetizes government deficit; new high-powered money is created, raising money supply. Correct.

4. Sale of government securities to the public by the Central Bank — This is an open market sale; the public pays the Central Bank, withdrawing liquidity. Incorrect.

Hence, statements 1 and 3 are correct.