Skip to content

CMA Foundation · Fundamentals of Business Economics and Management · Money and Banking

In an economy, M1 is ₹25,000 crore, M3 is ₹90,000 crore, post office savings bank deposits are ₹4,000 crore and M4 is ₹1,02,000 crore. Using the traditional definitions, what are time deposits with banks and the value of M2 respectively, and what do the data imply about other post office deposits in M4?

Time deposits are ₹65,000 crore (M3 minus M1), M2 is ₹29,000 crore (M1 plus post office savings of 4,000), and M4 minus M3 gives total post office deposits of 12,000, leaving ₹8,000 crore of other post office deposits.

  1. A₹65,000 crore; ₹29,000 crore; other post office deposits ₹8,000 croreCorrect
  2. B₹65,000 crore; ₹29,000 crore; other post office deposits ₹12,000 crore
  3. C₹65,000 crore; ₹94,000 crore; other post office deposits ₹8,000 crore
  4. D₹90,000 crore; ₹29,000 crore; other post office deposits ₹8,000 crore

Explanation

Time deposits = M3 − M1 = 90,000 − 25,000 = 65,000. M2 = M1 + post office savings deposits = 25,000 + 4,000 = 29,000. M4 = M3 + all post office deposits (excluding NSCs) = 1,02,000, so total post office deposits = 12,000; excluding the 4,000 savings deposits, other post office deposits = 8,000. Option with 94,000 wrongly adds post office deposits to M3 as if it were M2.

Did you get it right without looking?

One question tells you little. A timed set on Money and Banking shows your real accuracy, how long you take and where you lose marks.

Practise Money and BankingFree diagnostic mock

More Money and Banking questions