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Enumerate the different components of money supply.

Asked by Topperlearning User 24th April 2015, 7:31 AM
Answered by Expert

Money supply consists of various components as follows:

Currency, demand and time deposits in commercial banks, and other types of deposits are the total amount of money in an economy. Definition of supply of money varies depending on the components which are included and excluded.

M1 = Currency with the public + demand deposits with the commercial banks + deposits kept by commercial banks with the Reserve Bank.  

or M1 = C + DD + OD

M2 = M1 + Savings deposits with Post office Savings banks.

M3 = M2 + Term deposits in Commercial banks.

M4 = M3 + Savings with the Post office other than in the form of National Saving Certificate.

Answered by Expert 24th April 2015, 9:31 AM
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