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WBCS Main Examination 2023 — Paper V: Indian Constitution and Economy · Question 148 of 200

Q148
Indian EconomyMoney, Banking & Financial Institutions
According to Reserve Bank directives, the concept of broad money $M_2$ is the aggregate of
  1. a.currency with the public and post office savings deposits.
  2. b.currency with the public and demand deposits of commercial banks.
  3. c.currency with the public, demand deposits of commercial banks and time deposits of commercial banks.
  4. d.currency with the public and time deposits of commercial banks.

Answer: (C) currency with the public, demand deposits of commercial banks and time deposits of commercial banks.

Under the RBI's revised monetary aggregates (1998), $NM_2$ = $NM_1$ (currency with the public and demand deposits) plus short-term time deposits of banks, so it combines currency, demand deposits and time deposits. Currency with demand deposits alone is narrow money ($M_1$), and the other options omit a component.

Q147 Whole paperQ149