Official Answer Key & Detailed Solution
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Correct Answer: Option (D) — 1, 2 and 3
Concept & Option Breakdown
Standard Reference VerifiedIn monetary aggregates compiled by the RBI:
- M1 (Narrow Money) = Currency with the public + Demand deposits with the banking system + 'Other' deposits with the RBI.
- M3 (Broad Money) = M1 + Time deposits with the banking system.
Therefore, M3 includes Currency with the public (1), Demand deposits with banks (2), and Time deposits with banks (3).
M3 = Narrow Money (M1) + Time deposits. Since M1 itself contains currency with public + demand deposits, Broad Money contains all three components.
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