Consider the following: 1. Currency with the public 2. Demand deposits with banks 3. Time deposits with banks Which of these are included in Broad Money (M3) in India?
- A1 and 2
- B1 and 3
- C2 and 3
- D1, 2 and 3Correct
Explanation
Broad Money, denoted as M3 in India, is a comprehensive measure of the total money supply in the economy. It includes both liquid money and less liquid savings held in the banking system.
According to the Reserve Bank of India, M3 is calculated as the sum of Narrow Money (M1) and Time Deposits with the banking system.
M1 consists of currency with the public and demand deposits with banks, such as savings and current accounts. Time deposits refer to fixed deposits and recurring deposits which have a specific maturity period.
Since M3 includes currency with the public, demand deposits, and time deposits, all three components listed in the question are part of Broad Money. Therefore, the correct option is D.
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