M4 nomenclature has now been excluded.
The correct option is A True
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.
In India, other deposits of post office savings other than national savings certificate are included in M4 measurement of money supply which makes it a most rigid form of money supply in terms of liquidity. M4 measurement of money supply includes:
M4 = M3 + Total deposits with post offices other than in the form of national saving certificate
In which, M3 = C+ DD+ OD + net time deposits with the commercial banks
where,
C: It refers to currency held by public in terms of coins and paper notes.
DD: It refers demand deposits of the people with the commercial bank.
OD: These includes other deposits with public financial institution, foreign central banks and international financial institution.
But according to the definition of money supply, such a rigid form of money does not form a part of money supply. Therefore, M4 nomenclature has now been excluded from the measurements of money supply.
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.
In India, other deposits of post office savings other than national savings certificate are included in M4 measurement of money supply which makes it a most rigid form of money supply in terms of liquidity. M4 measurement of money supply includes:
M4 = M3 + Total deposits with post offices other than in the form of national saving certificate
In which, M3 = C+ DD+ OD + net time deposits with the commercial banks
where,
C: It refers to currency held by public in terms of coins and paper notes.
DD: It refers demand deposits of the people with the commercial bank.
OD: These includes other deposits with public financial institution, foreign central banks and international financial institution.
But according to the definition of money supply, such a rigid form of money does not form a part of money supply. Therefore, M4 nomenclature has now been excluded from the measurements of money supply.
