Question

$M_3$ measure of money supply does not include ____________.

• A. cash with public
• B. demand deposits with post offices
• C. demand deposits with banks
• D. time deposits with banks

Answer 1

Answer: (B)

demand deposits with post offices

The measures of money supply in India are as follow:

1. Reserve Money (M0): It is also known as High-Powered Money, monetary base, base money etc.
   M0 = Currency in Circulation + Bankers’ Deposits with RBI + Other deposits with RBI
   It is the monetary base of economy.
2. Narrow Money (M1):
   M1 = Currency with public + Demand deposits with the Banking system (current account, saving account) + Other deposits with RBI
3. M2 = M1 + Savings deposits(Demand deposits) of post office savings banks
4. Broad Money (M3)
   M3 = M1 + Time deposits with the banking system
5. M4 = M3 + All deposits with post office savings banks