Question
Which of the following is NOT a component of M1 money supply in India?
Solution
- In India's monetary aggregates:
- M1 (Narrow Money) = Currency with the Public + Demand Deposits with Banks + 'Other' Deposits with RBI (which mainly comprises deposits of foreign central banks, international institutions, etc.).
- Time Deposits (fixed deposits, recurring deposits) are not part of M1. They are included in M3 (Broad Money) , which is M1 + Time Deposits with Banks. M1 represents the most liquid forms of money readily available for transactions.
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