Which of the following includes narrow money:
Which of the following includes narrow money: 1. Currency held by the public 2. Demand Deposits 3. Time Deposits Choose the correct option from the codes given below:
[A]Only 1
[B]Only 1 & 2
[C]1, 2 &3
[D]Only 1 & 3
Only 1 & 2
At any point of time, the money held with the public has two most liquid components viz. Currency Component: This consists of all the coins and notes in the circulation; and Demand Deposit Component: Demand Deposit component is the money of the general public with the banks, which can be withdrawn by them using cheques, withdrawals and ATMs. The above two components i.e. currency component and demand deposit component of the public money is called Narrow Money and is denoted by the RBI as M1. Thus, M1 = Currency with the public + Demand Deposits of public in Banks