Question

Match the following:

• A. A-I, B-II, C-III, D-IV
• B. A-IV, B-I, C-II, D-III
• C. A-I, B-II, C-IV, D-III
• D. A-III, B-IV, C-I, D-III

Hint:

Remember: \[ M1 = \text{Currency + Demand Deposits} \] \[ M3 = M1 + \text{Net time deposits} \] \[ \text{Money Multiplier} = \frac{1}{CRR} \]

Answer 1

The Correct Option is B

Concept:
Money supply measures and financial terms have specific formulas. We must match each term with its correct definition.

Step 1: Match M1.
M1 is the narrow measure of money supply. It includes: \[ \text{Currency + Demand Deposits} \] So: \[ A \rightarrow IV \]

Step 2: Match M3.
M3 is a broader measure of money supply. It includes: \[ M1 + \text{Net time deposits of commercial banks} \] So: \[ B \rightarrow I \]

Step 3: Match Net Worth.
Net worth is calculated as: \[ \text{Net Worth} = \text{Assets} - \text{Liabilities} \] So: \[ C \rightarrow II \]

Step 4: Match Money Multiplier.
Money multiplier is: \[ \text{Money Multiplier} = \frac{1}{CRR} \] So: \[ D \rightarrow III \]

Step 5: Final matching.
The correct matching is: \[ A-IV,\quad B-I,\quad C-II,\quad D-III \] Hence: \[ \boxed{\text{(B)}} \]