Question

According to 1979 classification of money stock by RBI is ______________.

• A. $M_1$ = Broad money
• B. $M_1$ = Coins + notes + demand deposits of public
• C. $M_1$ = Post Office Savings deposits
• D. $M_1$ = Post office deposits of all types

Answer 1

Answer: (B)

$M_1$ = Coins + notes + demand deposits of public

Money stock 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. According to 1979 classification of money stock by Reserve Bank of India(RBI):

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.