Q. Which of the following sums constitutes Broad Money in India?
I. Currency with the Public
II. Demand deposits with banks
III. Time deposits with banks
IV. Other deposits with RBI
Choose the correct answer using the codes given below:
Answer: I, II and III
Notes: Narrow money is the most liquid part of the money supply because the demand deposits can be withdrawn anytime during the banking hours. Time deposits on the other hand have a fixed maturity period and hence cannot be withdrawn before the expiry of this period. When we add the time despots into the narrow money, we get the broad money, which is denoted by M3. M3 = Narrow money + Time Deposits of public with banks. We note here that the Broad money does not include the interbank deposits such as deposits of banks with RBI or other banks. At the same time, time deposits of public with all banks including the cooperative banks are included in the Broad Money.

This question is part of 40000+ MCQs GKToday PCS Mock Tests Series in GKToday Android app. Question Number: 40 in GKToday PCS Mock Test - 359 in above course in App.