Consider the following: 1. Currency with the public 2. Demand deposits with banks 3. Time deposits with banks Which of these are included in Broad Money (M3) in India?

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Submitted by examrobotsa on

Q: 116 (IAS/2002)
Consider the following:
1. Currency with the public
2. Demand deposits with banks
3. Time deposits with banks
Which of these are included in Broad Money (M3) in India?

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,266,76,45,14,17,266

keywords: 

{'demand deposits': [0, 0, 1, 0], 'currency': [0, 1, 0, 3], 'time deposits': [0, 1, 1, 1], 'banks': [5, 6, 5, 25], 'broad money': [0, 1, 0, 0], 'm3': [1, 2, 2, 1]}

Broad Money (M3) in India includes all the components mentioned in the options: 1, 2, and 3.

Option 1 includes `Currency with the public` and `Demand deposits with banks`. `Currency with the public` includes all the physical currency that is not held by the Reserve Bank of India(RBI) but is in circulation among the public. `Demand deposits with banks` refers to the money that is deposited in a bank account and can be withdrawn at any time without prior notice to the bank.

Option 2 includes `Currency with the public` and `Time deposits with banks`. The latter refers to the money deposited in a bank account for a fixed period of time, and it cannot be withdrawn before the maturity date without penalty.

Option 3 includes `Demand deposits with banks` and `Time deposits with banks`, both are deposits in a bank. However, the difference is in the terms of withdrawals.

Option 4 includes all these three components: currency with the public, demand deposits, and time deposits with banks which is the definition of broad Money (M3) in India. Therefore, option 4 is the correct answer.