ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Inter bank deposits
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Currency and coins with public
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Other deposits with RBI
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Demand deposits with banks
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Detailed explanation-1: -M1 is a narrow measure of the money supply that includes currency, demand deposits, and other liquid deposits, including savings deposits. M1 does not include financial assets, such as bonds.
Detailed explanation-2: -M1 includes net demand deposits and not gross demand deposits, as net demand deposits do not include inter-banking claims.
Detailed explanation-3: -Answer and Explanation: Credit card balances are not included in M1 because they are not even cash held by individuals, but instead debt to a bank.
Detailed explanation-4: -Answer and Explanation: The answer is d) Credit card balances. In macroeconomics, as measures of amount of money flowing in an economy, M1 and M2 include currency, deposits, and some other categories.