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Match List-I with List-II

List-IList-II
(A) M1M_1(I) M1M_1 + Net time deposits of commercial banks
(B) M3M_3(II) Assets - Liabilities
(C) Net Worth(III) 1/CRR
(D) Money Multiplier(IV) Currency + Demand Deposit

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 2

(A) - (IV), (B) - (I), (C) - (II), (D) - (III) -> Let's match each term correctly:

(A) M1 = (IV) Currency + Demand Deposit: M1 is the narrow measure of money supply consisting of currency held by the public and demand deposits with commercial banks.

(B) M3 = (I) M1 + Net time deposits of commercial banks: M3 is the broad measure of money supply, which includes M1 plus time deposits (fixed deposits) with commercial banks.

(C) Net Worth = (II) Assets - Liabilities: Net Worth represents the equity or ownership value, calculated as the difference between total assets and total liabilities.

(D) Money Multiplier = (III) 1/CRR: The money multiplier is the reciprocal of the Cash Reserve Ratio (CRR), which determines how much the money supply can expand through the banking system. -> correct

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