Which of the following refers to narrow money?

Postal savings bank deposits

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Term deposits with the commercial banks

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Currency with the public

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Currency with the public, demand deposits with commercial banks and other deposits with the RBI

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Solution

The correct option is D
Currency with the public, demand deposits with commercial banks and other deposits with the RBI

M₁ is termed as narrow money while M₃ is termed as broad money.

M₁ = Currency with the public + demand deposits with the commercial banks + other deposits with the RBI

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