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Q106 (CDS-I/2016) Economy › Money, Banking & Inflation › Monetary aggregates Answer Verified

Which of the following is/are example(s) of ‘Near Money’ ? 1. Treasury Bill 2. Credit Card 3. Savings accounts and small time deposits 4. Retail money market mutual funds Select the correct answer using the code given below:

Result
Your answer: —  ·  Correct: D
Explanation

Near money, also known as quasi-money, refers to non-cash assets that are highly liquid and easily convertible into cash with minimal loss of value. Treasury Bills (T-Bills) are short-term government debt instruments traded in the money market and are classic examples of near money due to their high liquidity and safety [2]. Savings accounts and small time deposits are also classified as near money because, while not immediately expendable like cash, they can be quickly converted through withdrawals [4]. Retail money market mutual funds, which invest in short-term debt securities, are similarly included in this category as they serve as cash equivalents. Conversely, a credit card is not near money; it is a payment tool or a form of debt (deferred payment) rather than a liquid asset or a store of value [3]. Therefore, items 1, 3, and 4 are correct.

Sources

  1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 2.5 Government Securities > p. 46
  2. [2] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 2.7 Financial Markets > p. 50
  3. [4] https://www.investopedia.com/terms/n/near-money.asp
  4. [3] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Debit Card > p. 194
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