If you withdraw ₹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:

Correct Option (D):

When cash is withdrawn from a demand deposit account, it results in a change in the composition of the aggregate money supply, but not its total volume. Money supply, typically measured as M1 or M3, includes both currency with the public and demand deposits held in banks.

• Currency with the public increases by ₹1,00,000.
• Demand deposits with banks decrease by ₹1,00,000.

Since both currency and demand deposits are components of the aggregate money supply, this transaction merely converts one form of money (demand deposit) into another (currency). Consequently, the total aggregate money supply in the economy remains unchanged.

Incorrect Options:

• Option 1: This is incorrect because the money is not destroyed. The act of withdrawal is a conversion of money from one form (bank deposit) to another (physical currency held by the public).
• Options 2 and 3: These are incorrect because the transaction does not create new money or inject additional liquidity into the economy. It is a reclassification of existing money within the money supply components, hence the aggregate amount remains constant.