Question

The M3 Concept of Money Supply includes
1. Time Deposits with Banks
2. Savings account deposits with Post Offices
3. Demand Deposits with Banks
4. Currency held by the public
Select the correct answer using the codes given below:

• A. Only 1, 2 and 3
• B. Only 2, 3 and 4
• C. Only 1, 3 and 4
• D. Only 1, 2 and 4

Answer 1

The correct option is C Only 1, 3 and 4

Money Supply is the total stock of all types money (currency + deposit money) held with public.
Concepts/Measurement of Money Supply:
M1 = C + DD + OD (Narrow Money
C – Currency held by the public
DD – Demand Deposits with Banks
OD – Other deposits (Demand Deposits held by RBI
M2 = M1 + Savings account deposits with Post Office
M3 = M1 + TD (Broad Money)
TD – Time Deposits with Banks Includes fixed deposits, Recurring deposits and time liability of Savings accountsM4 = M3 + Total Deposits with Post Office