Q. In context with the 4 concepts of Money supply in India (i.e. M1, M2, M3 and M4) used by Reserve Bank of India, which among the following are the most relevant ?
Answer: M1 & M3
Notes: In the context of the money supply in India, M1 and M3 are the most relevant concepts. - M1 includes the most liquid forms of money: currency in circulation, demand deposits, and other liquid assets. It reflects the money available for immediate spending. - M3 encompasses M1 plus time deposits with banks, providing a broader view of the money supply that includes savings and fixed deposits. M2 and M4 are less commonly referenced in monetary policy discussions. M2 includes M1 plus savings deposits, while M4 includes M3 plus all other deposits with the post office savings banks. The Reserve Bank of India primarily focuses on M1 and M3 for policy formulation and economic analysis.