Question

Consider the following statements:

1. M₁ is a broad concept of money.
2. M₂ is a narrow concept of money.
3. M₃ includes both M₁ and lime deposit of public with the bank.

Which of the following is true with respect to the concept of supply of money?

Options

• I and II

• I only

• II and III

• II only

Answer 1

II and III

Explanation:

M₁ and M₂ are narrow money because they include highly liquid assets that are easily transferable. M₃ = M₁ + Public Time Deposits with Banks.