Question

Define money. List its components.

Answer 1

Dear student,
Money is something which can be accepted as a medium of exchange. this is the narrow definition of the money. the broader one includes two more functions of the money is that it is a store of value and provide means for deferred payment.
it includes coins, cheques, currency notes, plastic currency (debit cards etc), money held with banks in the form of saving current accounts, fixed deposits etc
Its components are (components are the same as money supply)
1. M1= currency and coins + demand deposits of commercial banks + other deposits with RBI
2. M2= M1 + Savings deposits with post office savings banks.
3. M3= M1 + net time deposits with the bank
4. M4= M1 + total deposits with post office bank

Regards!!