Economics • Banking & FinanceMedium
In monetary aggregate classification used by the Reserve Bank of India, what constitutes 'Broad Money' (M3)?
A. Currency with the public + Demand deposits with banks + Other deposits with RBI
B. M1 + Time deposits with the banking system✓ Correct Answer
C. M1 + Savings deposits with Post Office savings banks
D. M3 + Total post office deposits
💡 Solution & Explanation
Broad Money or M3 comprises Narrow Money combined with aggregate time deposits held within the commercial banking network of the country. Alternative monetary aggregates incorporate different liquidity tiers, with M1 focusing strictly on currency and immediate demand liabilities.
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