CONCEPT OF MONEY SUPPLY- Calculating M2

Economics

In Institute material, page no 3.47 Illustration 4 calculating M2.. I have a doubt why it doesn't take other deposits with the RBI and why it took deposit money with the public instead of DD with banks and One more doubt is while calculating M1 why they are deducting Cash on hand with banks when formula did not have any note of it.. Please clarify my doubt .. best wishes...

Manoj Raj

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29-Apr-22 12:49

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Answers (3)

Best Answer

Deposit money with public. = Demand deposit with banks+ other deposit with RBI

Sathiya Bama

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29-Apr-22 13:07

Cash on hand with banks does not involve in movement of circulation( that is it will b kept by banks itself ) ,so it should b deducted while calculating M1

Sathiya Bama

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29-Apr-22 13:09

Sathiya Bama

Cash on hand with banks does not involve in movement of circulation( that is it will b kept by banks itself ) ,so it should b deducted while calculating M1

Thank you

Thread Starter

Manoj Raj

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30-Apr-22 10:58