Which of the following money form are also known as aggregate monetary resources?
- A.M2
- B.M3
- C.M4
- D.M1
Correct answer
Explanation
The correct answer is B, M3. M3 is called broad money or aggregate monetary resources. It equals M1 plus the time deposits of the public with banks, so it measures almost all the money available in the economy. The Reserve Bank of India uses four measures, M1 to M4, introduced in 1977, and M3 is the one most often used to track money supply. Liquidity falls as we move from M1 to M4, because time deposits and post office deposits cannot be spent as quickly as cash. Option A is wrong because M2 is M1 plus the savings deposits with post office savings banks. Option C is wrong because M4 is M3 plus total post office deposits, excluding National Savings Certificates. Option D is wrong because M1 is narrow money: currency with the public, demand deposits with banks and other deposits with the RBI. Exam tip: M1 is narrow money and M3 is broad money or aggregate monetary resources; M1 is the most liquid and M4 the least.
Practice Questions
View allAccording to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to
- A.improve
- B.diminish
- C.remain constant
- D.first diminish and then improve
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Each extra unit of a good gives a consumer less additional satisfaction than the unit before it, so marginal utility falls as consumption rises.
Read the full explanation →Consider the following statements about impact of tax : 1. A tax is shifted forward to consumers if the demand is inelastic relative to supply. 2. A tax is shifted backward to producers if the supply is relatively more inelastic than demand. Which of the statements given above is/are correct?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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The burden of a tax falls more heavily on whichever side of the market is less elastic, the side that cannot easily walk away.
Read the full explanation →UBI, as an alternative for subsidies in poverty alleviation, stands for
- A.Union Basic Income
- B.Undefined Basic Income
- C.Unconditional Basic Income
- D.Universal Basic Income
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UBI is the idea of paying every citizen a fixed sum of money regularly, without conditions, in place of a large number of separate subsidies and welfare schemes.
Read the full explanation →Who among the following is the Chairman of the Fourteenth Finance Commission?
- A.C. Rangarajan
- B.Vijay Kelkar
- C.Y. V. Reddy
- D.Rakesh Mohan
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The Fourteenth Finance Commission, set up in 2013 for the award period 2015-2020, was chaired by Y. V. Reddy, a former Governor of the Reserve Bank of India.
Read the full explanation →Why was constitutional amendment needed for introducing GST?
- A.States were not willing to agree with the Union for introduction of GST without amendment in the Constitution.
- B.GST was to be implemented on concurrent base and Article 246 was inadequate for such a case.
- C.The Empowered Committee of Finance Ministers had recommended for constitutional amendment.
- D.The GST Council had recommended for constitutional amendment so that its power enhances.
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GST is levied by the Union and the States together on the same supply, and Article 246, which splits taxing powers between them through separate lists, did not allow such a concurrent tax.
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