Money and banking

Indian Economy (CDS)

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Indian Economy - Understanding the basics of Indian economic system

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Consider The following

Currency with the public
Demand deposits
"Other' deposits with Reserve Bank of India
Banker's deposits with Reserve Bank of India

How many of the following above are included in the definition of Narrow Money ?

Only one

Only Two

Only Three

All Four

Explanation:

Correct :Currency with the Public: Narrow money typically includes the physical currency that is in circulation with the public. It is the most liquid form of money.
Correct:Demand Deposits: These are deposits that can be withdrawn on demand, making them highly liquid. They are included in the definition of narrow money.
InCorrect:'Other' Deposits with Reserve Bank of India: These are not considered part of narrow money. They are not as liquid as currency and demand deposits.
InCorrect:Banker's Deposits with Reserve Bank of India: These are also not included in narrow money, as they are not as liquid as currency and demand deposits.

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