Question

Match List-I with List-II \[\begin{array}{|c|c|} \hline \textbf{Measures of Money Supply} & \textbf{Components} \\ \hline \text{(A) M3} & \text{(I) Currency held by the public (C) + net demand deposits of banks (DD) + other deposits of the RBI (OD)} \\ \hline \text{(B) M2} & \text{(II) C + DD + OD + net time deposits of banks} \\ \hline \text{(C) M1} & \text{(III) C + DD + OD + saving deposits with post office saving banks} \\ \hline \text{(D) M4} & \text{(IV) C + DD + OD + net time deposits of banks + total deposits with post office savings organization (excluding National Saving Certificates)} \\ \hline \end{array}\] Choose the correct answer from the options given below:

• (A) - (II), (B) - (I), (C) - (III), (D) - (IV)
• (A) - (I), (B) - (II), (C) - (III), (D) - (IV)
• (A) - (III), (B) - (IV), (C) - (I), (D) - (II)
• (A) - (IV), (B) - (III), (C) - (II), (D) - (I)

Hint:

M3 is the broadest measure of the money supply, while M1 includes the most liquid forms of money.

Answer 1

The Correct Option is B

Step 1: Define money supply components.
- M3 (A): Broadest measure; includes public currency, bank demand deposits, and RBI other deposits. Matches (I).
- M2 (B): Includes public currency, bank demand deposits, RBI other deposits, and bank net time deposits. Corresponds to (II).
- M1 (C): Includes public currency, demand deposits, RBI other deposits, and post office savings bank savings deposits. Corresponds to (III).
- M4 (D): Includes all M3 and M1 components, plus total post office savings organization deposits (excluding National Savings Certificates). Corresponds to (IV).

Step 2: State the conclusion.
The correct matching is (A) - (I), (B) - (II), (C) - (III), (D) - (IV).