Consider the following definitions related to money supply aggregates used by the Reserve Bank of India: 1. M1 includes currency with the public, demand deposits with banks, and 'other deposits' with the RBI. 2. M3 is broader than M2 and includes net time deposits with commercial banks along with M1. Which of the statements given above is/are correct?

💡 Solution & Explanation

M1 money supply comprises currency with the public, demand deposits with commercial banks, and other deposits held with the Reserve Bank of India. M3 represents broad money by adding net time deposits of commercial banks to the M1 aggregate, making both statements accurate. Monetary aggregates and RBI definitions are fundamental concepts in Indian banking and economy modules.