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Question
As money can be easily withdrawn in M1 and M2, it is known as
As money can be easily withdrawn in M1 and M2, it is known as
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Solution
The correct option is D narrow money
The money supply is calculated using four different components: M1, M2, M3, and M4. Since the money in M1 and M2 is easily available for spending and is constantly in circulation in the economy, it is called narrow money. The money represented by M3 and M4 can be used only after a particular period of time and hence, it is called broad money.
The money supply is calculated using four different components: M1, M2, M3, and M4. Since the money in M1 and M2 is easily available for spending and is constantly in circulation in the economy, it is called narrow money. The money represented by M3 and M4 can be used only after a particular period of time and hence, it is called broad money.
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