Money Supply and Inflation
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Indian Economy and Indian Financial System — JAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What does M0 represent in India's money supply classification?
M0 is the monetary base or reserve money, comprising currency in circulation, bankers' deposits with RBI, and other deposits with RBI.
What is the full form of CPI in the context of Indian inflation measurement?
Consumer Price Index measuring retail price changes
Which component distinguishes M1 from M0 in India?
M1 includes currency with the public and demand deposits with banks, whereas M0 is the monetary base held by the banking system and public.
What is M4 in India's money supply classification?
M3 plus total deposits of post office savings institutions
What is the definition of M3 in the Indian context?
M3, also called broad money, equals M1 plus time deposits with banks; it is the most commonly used measure of money supply by RBI for policy purposes.
What is 'reserve money' also commonly known as in monetary economics?
High-powered money or monetary base
How does M2 differ from M1 in India's money supply framework?
M2 equals M1 plus savings deposits of post office savings banks, providing a broader measure than M1 but narrower than M3.
What is the primary cause of built-in inflation?
Wage-price spiral driven by cost-of-living adjustments
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