Question

Ms. lqra Ansari, a teacher, was explaining in her class about various types of deposits with the commercial banks. She quoted that - "These deposits form a part of M1 measure of money supply and are payable on demand by the commercial banks."

Identify the type of deposits she was explaining about and choose the correct alternative:

1. Demand Deposits
2. Time Deposits
3. Post Office Deposits

Options

• Only (i)

• (i) and (ii)

• Only (ii)

• (i), (ii) and (iii)

Answer 1

Only (i)

Explanation:

1. M1 contains people's demand deposits or chequable deposits with commercial banks. Currency and other deposits are also included.
2. M3 comprises commercial bank time deposits.
3. M4 deposits include demand deposits, time deposits, and post office deposits.