Question

Match the following:

• A. A-I, B-II, C-III, D-IV
• B. A-IV, B-I, C-II, D-III
• C. A-I, B-II, C-IV, D-III
• D. A-III, B-IV, C-I, D-III

Hint:

Remember: \[ M1 = \text{Currency + Demand Deposits} \] \[ M3 = M1 + \text{Net time deposits} \] \[ \text{Money Multiplier} = \frac{1}{CRR} \]

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
This question tests knowledge of monetary aggregates (M1, M3) defined by the RBI and basic financial identities.
Step 2: Detailed Explanation:
- M1: Known as "Narrow Money", it includes the most liquid assets. Matching: Currency + Demand Deposits. (A matches IV)
- M3: Known as "Broad Money", it includes M1 plus less liquid time deposits (like FDs). Matching: M1 + Net time deposits. (B matches I)
- Net Worth: In accounting, it represents the equity value of an entity. Matching: Total Assets minus Total Liabilities. (C matches II)
- Money Multiplier: It represents the maximum amount of money the banking system generates with each unit of reserves. Matching: \( \frac{1}{CRR} \). (D matches III)
Step 3: Final Answer:
The correct matching is A-IV, B-I, C-II, D-III.