Consider the following:1. Currency with the public2. Demand deposits with banks3. Time deposits with banks Which of these are included in Broad Money(M3) in India ?
✓ Correct answer: d) 1, 2 and 3
ExplanationThe money supply in an economy refers to the total stock of money available at a given point in time.The Reserve Bank of India (RBI) publishes several measures of the money supply, namely M1, M2, M3, and M4. M3 (Broad Money) is defined as M1 plus net Time Deposits with the banking system.Currency with the publicDemand deposits with banksTime deposits with banks Money Type Includes Narrow/ Broad Rank (Liquid- ity) M1 Currency with public (coins, currency notes), Net demand deposits held by the public with commercial banks & other de- posits with RBI Narrow Money 1 (Most Liquid) M2 M1 + savings deposits with post office Narrow Money 2 M3 M1 + time deposits with the banking system (such as fixed deposits) Borad Money 3 M4 M3 + all deposits with post office savings organizations, excluding National Savings Cer- tificates Broad Money 4 (Least Liq- uid) 206
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