What is narrow and broader approach of money supply
Narrow Approach
It includes M1 and M2 measure of money supply. According to this approach money supply includes coins, currency notes and demand deposits. M1 is the most liquid.
Broader approach
It includes M3 and M4 measure of money supply. According to this approach, money supply includes coins, currency notes, Bank's demand deposits,time deposits with bank, financial assets, post office savings, bills, bonds equities and credit cards. M4 is the least liquid.
Money supply
The total stock of money in circulation among the public at a particular point of time is called money supply.
High powered money
high powered money consists of currency held by public and reserves of commercial banks which includes Walt cash and Bank deposits with RBI.
0 Comments