Which one of the following forms of money supply is considered as the

Which one of the following forms of money supply is considered as the most widely used in the Indian monetary system ?

Answer is Right!

Answer is Wrong!

This question was previously asked in

UPSC CDS-2 – 2022

The correct answer is C. M3 is considered the most widely used measure of money supply in the Indian monetary system.

– The Reserve Bank of India (RBI) tracks several measures of money supply: M1, M2, M3, and M4.
– M1 is narrow money (most liquid assets). M3 is broad money.
– M3 includes M1 plus net time deposits of commercial banks. It is considered a better indicator of the overall liquidity in the economy and is the measure most commonly used by the RBI for monetary policy purposes.

In 1998, the RBI introduced new monetary aggregates (NM1, NM2, NM3) and liquidity aggregates (L1, L2, L3) based on the recommendations of the Working Group on Money Supply. However, M3 continues to be the traditional and widely referred measure of money supply in India.

Join Our Telegram Channel

More similar MCQ questions for Exam preparation:-