Economics • Banking & FinanceMedium
Examine the composition of money supply aggregates in India as defined by the Reserve Bank of India. Which aggregate represents the narrowest measure designated as M one?
A. Currency with the public plus demand deposits with banks plus other deposits with the central bank✓ Correct Answer
B. Total post office savings bank deposits plus all time liabilities of commercial banks
C. Net bank credit to the government plus bank credit to the commercial sector
D. Aggregate time deposits with scheduled commercial banks across all maturity tenors
💡 Solution & Explanation
Narrow money, denoted as M one, comprises currency held by the public, demand deposits with banking institutions, and other miscellaneous deposits held with the central bank. Broader aggregates like M three incorporate time deposits, representing the total monetary resources of the banking sector. The Reserve Bank of India publishes these monetary aggregates regularly in its statistical bulletins.
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