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What are the broad components of money supply measure M3?

A. Currency in circulation

B. Net fixed deposits with the banking system

C. Post office savings deposit

D. Demand Deposits

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 2

M3 == M1 ++ net time (fixed) deposits with the banking system, where M1 comprises currency in circulation, demand deposits with banks and other deposits with the RBI. Post office savings deposits belong to M2, not M3. Hence A, B and D only.

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