Multiple choice

The sum of which of the following constitutes Broad Money in India?

  1. Currency with the public
  2. Demand deposits with banks
  3. Time deposits with banks
  4. Other deposits with RBI

  1. 1 and 2

  2. 1, 2 and 3

  3. 1, 2, 3 and 4

  4. 1, 2 and 4
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Narrow money is the most liquid part of the money supply because the demand deposits can be withdrawn anytime during the banking hours. Time deposits on the other hand have a fixed maturity period and hence, cannot be withdrawn before expiry of this period. When we add time deposits into narrow money, we get broad money, which is of public with banks.

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