2
Question
According to 1979 classification ________.
According to 1979 classification ________.
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Solution
The correct option is C M2 = M1 + Post office savings deposits
Money supply refers to the total stock of money of all types (
currency as well as deposits) held by the people of a country at a given
point of time.
Money supply is measured in several ways which includes M1, M2, M3
and M4 measurement of money supply. Every measurement has it own
definition with different components varying from most liquid to most rigid form. According to 1979 classification,
M2 =
M1+ deposits with the post office savings bank account
In which
M1= C+N+ DD
where,
C: It referred to currency held by public in terms of coins.
N: It referred to currency held by public in terms of notes.
DD: It referred demand deposits of the people with the commercial bank.
Money supply refers to the total stock of money of all types ( currency as well as deposits) held by the people of a country at a given point of time.
Money supply is measured in several ways which includes M1, M2, M3 and M4 measurement of money supply. Every measurement has it own definition with different components varying from most liquid to most rigid form. According to 1979 classification,
M2 = M1+ deposits with the post office savings bank account
In which
M1= C+N+ DD
where,
C: It referred to currency held by public in terms of coins.
N: It referred to currency held by public in terms of notes.
DD: It referred demand deposits of the people with the commercial bank.
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