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Q32 (CGS/2026) Economy › Money, Banking & Inflation

Which of the following is/are considered to be part/parts of broad money measure but not part/parts of narrow money measure?

I. Currency with the public
II. Demand deposits with banks
III. Time deposits with banks

Select the correct answer using the code given below.

Result
Your answer: —  Â·  Correct: B

Explanation

In the Indian economy, the Reserve Bank of India (RBI) classifies money supply into four aggregates: M1, M2, M3, and M4.

  • Narrow Money (M1): Includes currency with the public, demand deposits with the banking system (current and savings accounts), and 'other' deposits with the RBI.
  • Broad Money (M3): Includes M1 plus time deposits (fixed deposits, recurring deposits) with the banking system.

Statement I (Currency) and Statement II (Demand deposits) are components of both narrow money (M1) and broad money (M3). Statement III (Time deposits) is a component of broad money but is not included in the narrow money measure. Therefore, only Statement III satisfies the criteria of being part of broad money but not narrow money.

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SIMILAR QUESTIONS

CDS-II · 2023 · Q51 Relevance score: -0.31

Which of the following are included in the definition of Narrow Money? 1. Currency with the public 2. Demand deposits 3. 'Other' deposits with Reserve Bank of India 4. Banker's deposits with Reserve Bank of India Select the correct answer using the code given below : (a) 1, 2 and 4 (b) 1 and 2 only (c) 1, 2 and 3 (d) 3 and 4 only

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