CUET Preparation Today
The Reserve Bank of India publishes four measures of money supply. Which one of the measures is the least liquid in them? |
$M_1 = CU+DD$ $M_2=M_1$ + Savings deposits with Post Office savings banks. $M_3=M_1$ + Net time deposits of commercial banks. $M_4=M_3$ + Total deposits with Post Office savings organisations. |
$M_4=M_3$ + Total deposits with Post Office savings organisations. |
The correct answer is Option (4) → $M_4=M_3$ + Total deposits with Post Office savings organisations. M1 and M2 are known as narrow money. M3 and M4 are known as broad money. These measures are in decreasing order of liquidity. M1 is most liquid and easiest for transactions whereas M4 is least liquid of all. M3 is the most commonly used measure of money supply. It is also known as aggregate monetary resources. |
