Question

Match List-I with List-II \[\begin{array}{|c|c|} \hline \textbf{Measures of Money Supply} & \textbf{Components} \\ \hline \text{(A) M3} & \text{(I) Currency held by the public (C) + net demand deposits of banks (DD) + other deposits of the RBI (OD)} \\ \hline \text{(B) M2} & \text{(II) C + DD + OD + net time deposits of banks} \\ \hline \text{(C) M1} & \text{(III) C + DD + OD + saving deposits with post office saving banks} \\ \hline \text{(D) M4} & \text{(IV) C + DD + OD + net time deposits of banks + total deposits with post office savings organization (excluding National Saving Certificates)} \\ \hline \end{array}\] Choose the correct answer from the options given below:

• (A) - (II), (B) - (I), (C) - (III), (D) - (IV)
• (A) - (I), (B) - (II), (C) - (III), (D) - (IV)
• (A) - (III), (B) - (IV), (C) - (I), (D) - (II)
• (A) - (IV), (B) - (III), (C) - (II), (D) - (I)

Hint:

M3 is the broadest measure of the money supply, while M1 includes the most liquid forms of money.

Answer 1

The Correct Option is B

Step 1: Understanding the components of money supply.
- **M3 (A)** is the broadest measure of money supply and includes currency held by the public, demand deposits of banks, and other deposits of the RBI. This matches with **(I)**.
- **M2 (B)** includes currency held by the public, demand deposits of banks, other deposits of the RBI, and net time deposits of banks. This corresponds to **(II)**.
- **M1 (C)** includes currency held by the public, demand deposits, other deposits of the RBI, and savings deposits with post office savings banks. This corresponds to **(III)**.
- **M4 (D)** includes all components of M3 and M1, as well as total deposits with post office savings organization, excluding National Savings Certificates. This corresponds to **(IV)**.

Step 2: Conclusion.
The correct answer is **(A) - (I), (B) - (II), (C) - (III), (D) - (IV)**.