Multiple choice

The RBI classifies currency with public plus demand deposits with the public as

  1. M1

  2. M2

  3. M3

  4. M4
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A Correct answer
Explanation

 In 1979, the RBI classified money stock in India in the following four categories: M1 = Currency with the public, i.e. coins and currency notes + demand deposits of the public known as narrow money M2 = M1 + Post office saving deposits M3 = M1 + Time deposits of the pubic with banks called broad money M4 = M3 + Total post office deposits (excluding National Saving Certificates)

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