Which of the following pairs is correctly matched?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Balances in savings and current accounts – Demand deposits
Savings and current account balances can be taken out on demand, so they are demand deposits.
Option (1) Balances in savings and current accounts – Demand deposits — Correct. They are payable on demand to the account-holder.
Option (2) Currency notes in India – Issued by the Government of India — Incorrect. Notes are issued by the RBI; only coins come from the Government of India.
Option (3) Deposits of a bank in other commercial banks – Part of money supply — Incorrect. Interbank deposits are left out of money supply.
Option (4) Fixed deposits – Demand deposits — Incorrect. Fixed deposits have a fixed period to maturity, so they are time deposits.
NCERT (2026-27): “The Supply of Money : Various Measures In a modern economy money consists mainly of currency notes and coins issued by the monetary authority of the country. In India currency notes are issued by the Reserve Bank of India (RBI), which is the monetary authority in India. However, coins are issued by the Government of India. Apart from currency notes and coins, the balance in savings, or current account deposits, held by the public in commercial banks is also considered money since cheques drawn on these accounts are used to settle transactions. Such deposits are called demand deposits as they are payable by the bank on demand from the account-holder. Other deposits, e.g. fixed deposits, have a fixed period to maturity and are referred to as time deposits. …” “Legal Definitions: Narrow and Broad Money … The interbank deposits, which a commercial bank holds in other commercial banks, are not to be regarded as part of money supply. …” |