Match List-I with List-II
List-I List-II (A) (I) + Net time deposits of commercial banks (B) (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:
Match List-I with List-II
| List-I | List-II |
|---|---|
| (A) | (I) + Net time deposits of commercial banks |
| (B) | (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
(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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