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Question
Identify the correct statement with reference to the measures of money supply.
Options
M3 includes M2.
M3 includes Time Deposits with commercial banks.
M1 includes Time Deposits with commercial banks.
M2 includes National Saving Certificates.
MCQ
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Solution
M3 includes Time Deposits with commercial banks.
Explanation:
M3 (Broad Money)
M3 = M1 + Time Deposits with Commercial Banks
Includes everything in M1, plus time deposits (both fixed and recurring) with banks.
It is the most widely used measure of money supply in India.
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