Which of the following are included in M1 definition of money for the Indian economy? 1. Reserves 2. Currency 3. Time deposits 4. Demand deposits Select the correct answer using the code given below.
- A.1 and 3 only
- B.2 and 3
- C.2 and 4
- D.1, 3 and 4
Correct answer
Explanation
The correct answer is C, 2 and 4. M1, called narrow money, is the most liquid measure of money supply in India. It is made up of currency with the public, demand deposits with banks, and other deposits with the Reserve Bank of India. Demand deposits are savings and current account balances that can be withdrawn at any time by cheque or digital payment, so they work almost like cash. M3, broad money, adds time deposits such as fixed deposits to M1, and it is the measure the RBI most often reports. M0, or reserve money, includes currency in circulation, bankers' deposits with the RBI and other deposits with the RBI; it is the base on which banks create credit. Option A is wrong because reserves belong to M0, and time deposits belong to M3, not M1. Option B is wrong because time deposits are not part of M1. Option D is wrong because both reserves and time deposits are outside M1. Exam tip: M1 = currency + demand deposits + other deposits with RBI; M3 = M1 + time deposits.
Practice Questions
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- A.perfect competition
- B.imperfect competition
- C.monopolistic competition
- D.oligopoly
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Read the full explanation →Under normal downward sloping demand curve and fully elastic supply curve of a commodity, an exogenous decrease in demand would lead to
- A.increase in equilibrium price and quantity
- B.decrease in equilibrium price and quantity
- C.decrease in equilibrium quantity and no change in price
- D.increase in equilibrium price and no change in quantity
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Read the full explanation →Level of per capita GDP depends upon which of the following? 1. Proportion of population in the working age 2. Work participation rate 3. Per worker productivity Select the correct answer using the code given below.
- A.3 only
- B.1 and 3 only
- C.1 and 2 only
- D.1, 2 and 3
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Read the full explanation →Which of the following components of Central Government taxes on petroleum products is/are not shareable with the States? 1. Basic Excise Duty 2. Additional Excise Duty 3. Special Additional Excise Duty Select the correct answer using the code given below.
- A.1 and 2 only
- B.1, 2 and 3
- C.3 only
- D.2 and 3 only
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Read the full explanation →Which of the following statements with regard to the Report of Tendulkar Committee (2009) on poverty estimates is/are correct? 1. The Committee had used an all-India urban poverty line basket as a reference to derive both rural and urban poverty levels. 2. The Committee had anchored the poverty line to the official food calorie norms. Select the correct answer using the code given below.
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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