General Knowledge - Indian Economy - Discussion

Different measures of money supply. Not all of them are widely used and the exact classifications depend on the country. M0 and M1, also called narrow money, normally include coins and notes in circulation and other money equivalents that are easily convertible into cash. M2 includes M1 plus short-term time deposits in banks and 24-hour money market funds. M3 includes M2 plus longer-term time deposits and money market funds with more than 24-hour maturity. The exact definitions of the three measures depend on the country. M4 includes M3 plus other deposits. The term broad money is used to describe M2, M3 or M4, depending on the local practice.

the third equation is wrong.. U cn find it logically.. M1+M2=M2 Bcz M1 is already in M2...

different measures of money supply are mentioned below: M1:currency+demand deposits+other deposits with the Reserve Bank M2:M1+postal sevings bank deposits M3:M1+term deposits in banks M4:M1+postal savings bank deposits+term deposits in banks. Here,M1 is termed as the narrow money while M3 is called as the broad money.

M3: M1+ Time deposits with the banking system = Net bank credit to the Government + Bank credit to the commercial sector + Net foreign exchange assets of the banking sector + Government’s currency liabilities to the public – Net non-monetary liabilities of the banking sector (Other than Time Deposits).

M0 and M1(narrow money)= coins and notes in circulation and other money equivalents that are easily convertible into cash
M2= M1+ short-term time deposits in banks and 24-hour money market funds
M3= M2+longer-term time deposits and money market funds with more than 24-hour maturity
M4=M3+other deposits
broad money(M2, M3 or M4),depending on the local practice.
Therefore M1 from narrow money and M2 from broad money cant jointly create M3 because,M3 itself from broad money.

Different measures of money supply. Not all of them are widely used and the exact classifications depend on the country. M0 and M1, also called narrow money, normally include coins and notes in circulation and other money equivalents that are easily convertible into cash. M2 includes M1 plus short-term time deposits in banks and 24-hour money market funds. M3 includes M2 plus longer-term time deposits and money market funds with more than 24-hour maturity. The exact definitions of the three measures depend on the country. M4 includes M3 plus other deposits. The term broad money is used to describe M2, M3 or M4, depending on the local practice.

Please tell me exact functioning of M3 and M4.