1 Money Supply as defined by the Reserve Bank of India, M includes.....

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

1 Money Supply as defined by the Reserve Bank of India, M includes____

A	Currency with the public
B	Currency, demand deposits with Banks and other deposits with RBI
C	Currency with the public and time deposits with Banks
D	Currency with the public and deposits with National Savings Organizations

Explanation:

Detailed explanation-1: -The main source of money supply in India is in the form of bank deposits and cash. RBI monitors the money supply in the economy and has the power to print and issue currency. Base money is the money issued by the Central Bank. You can read about the Monetary Policy – Objectives, Role, Instruments in the given link.

Detailed explanation-2: -M1 includes all the currency notes being held by the public on any given day. It also includes all the demand deposits with all the banks in the country, both savings as well as current account deposits. It also includes all the other deposits of the banks kept with the RBI. So M1 = CC + DD + Other Deposits.

Detailed explanation-3: -Narrow money is also known as M1 and M2. Broad money means M3 and M4. The liquidity of these grades is decreasing. M1 is the most liquid and makes transactions the easiest, while M4 is the least liquid.

There is 1 question to complete.