Caiib Unit 3 Money Supply

ABM- Case study
RBI released following data  (Rs. in Crore)

Currency in circulation_________ 18071
Cash with Bank ______________ 1004
Current account balances ______ 3042
Saving bank balances _________  9445
post office total deposits________ 32560
(includes saving deposit 12109)
Term Deposit balances ________105331
Other Term deposit with RBI______201
Based on above data calculate

01. M1
a. 41864
b. 29755
c. 30759
d. None of the above
Solution
M1= Currency in circulation-Cash with bank+Current a/c balances+ Saving bank deposit+other deposit with RBI


= 18071-1004+3042+9445+201
= 29755
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02. M2
a. 41864
b. 29755
c. 30759
d. None of the above
Solution
M2= M1+post office saving
= 29755+12109
= 41864

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03. M3

a. 41864
b. 29755
c. 135286
d. 167846

Solution
M3 = M1+Time deposit with Banking system
= 29755+105531
= 135286

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04. M4
a. 41864
b. 102726
c. 135286
d. 167846

Solution
M4 = M3+ Total post office deposit
= 135286+32560
= 167846

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1. .... is used as a medium of exchange.
Money

2. in barter system.... money is used as a medium of exchange.
true/ false

False

3. can money be stored for a value over time

Yes

4. when money supply is decided by govt nd rbi ..then this is called .. exogenous/endogenous

Exogenous

5. study m1 to m4 formula.. they are asked directly

m1 formula ???

Meenakshi:
Currency with public?currency in circulation?cash held by banks

A.. +  =
B. +=
C.= -
D.- =

inflation effect on purchasing power ?
fall
rise
no effect

Ans-Fall

wt is demand pull inflation??
Ans-Demand is more than the supply.
Demand exceeds supply

cost push inflation??
Price rise due to increaee in cost of production
Increase the cost of production

inflation is calculated using what ??
Price index

headline inflation is also called??
Wpi

which is the official index for policy decisions ??
Ans- Wpi

wpi is announced on .... basis??
weekly.. monthly..daily
Ans-Monthly

.... is used as a cost of living index??
Cpi

cpi in india is released by whom??

....is not a measure of prices of all new domesticaly produced final goods n services in an economy.1.wpi
2.gdp inflator
3.cpi
options....
1,2
1,3
2,3
all
Ans-1,3

..... is a measure of level of price of prices of all new ,fom estically produced final goods n services in an economy.
GDP deflator

narrow money is indicated by ... ??
M1

Broad money?
Broad money m3

read definitions of m1 to m4 ...i dint ask qus from that... bt are imp ...direct formula is asked