LECTURE:5

Measures of money supply

Measures of money supply

1. Measures:
a. Money supply M1 oe narrow money: M1= C+DD+OD
C- Currency with the public
DD- Demand deposits with the public in the commercial and cooperative banks
OD- Other depostis held by the public with Reserve Bank of India
b.M2: M2= M1+ Savings deposits with the post office savings banks.
c. M3 or broad moneyz; M3 = M1+ Time Deposits with the banks.
d. M4: M4= M3+ Total Deposits with post office savings organisation.
2. Determinants of money supply:
a. Government borrowing from the banking system
b. Borrowing of the private or commercial sector form the banking system
c. Changes in net foreign assets held by the Reserve Bank of India caused by change in balance
of payments position
d. Government's currency liabilities to the public
e. High-powere money( Ref: Economic Environment of Business H. L. Ahuja pp-284-294)

Attachments:
supply of money unemployment
Reference:Economic Environment of Business H. L. Ahuja

Prepared by MBA\MRS R.CHITRA[ASSISTANT PROFESSOR\TSBA004]

27/11/09