Correct Answer: Post office savings deposits
Subject: economics
Explanation: • <b>Key Fact</b> M1 includes Currency with the public (coins and currency notes) + demand deposits of the public. • <b>Supporting Detail</b> Post office savings deposits are added to M1 to calculate M2 (M2 = M1 + post office savings deposits). • <b>Related Concept</b> M1 is known as narrow money and is the most liquid measure of money supply. • <b>Why wrong options are wrong</b> Options A, B, and D are integral parts of M1. • <b>Exam Trick</b> M1 is purely what is instantly spendable: Cash in hand + Bank Demand Deposits. • <b>Additional Info</b> M3 (Broad Money) is M1 plus net time deposits of commercial banks.
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