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Broad money and Narrow money
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This lesson describes about the narrow money,broad money and demonetization

Arpita Prakash
YouTuber NCERTs series initiator at Unacademy 'Educator of the Month' for Feb'19 CBSE 0.1% Merit Certificate holder in Mathematics

U
Unacademy user
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  1. NARROW AND BROAD MONEY Money Supply, like Money demand, is a stock variable Money supply- total stock of money in circulation among the public at a particular point of time RBI publishes figures for four alternative measures of money supply, viz. M1,M2,M3 and M4 M1 CU+DD(CU Currency( notes plus coins) held by public; DD- Net Demand Deposits held by commercial banks ) o Net->Inclusion of only the deposits of public held by banks in money supply; not the interbank deposits M2-M1Savings deposits with PO savings bank M3-M1+ Net time deposits of commercial banks . M4-M3+ Total deposits with PO savings organisations ( excluding National Savings Certificates) Narrow Money-> M1 and M2; Broad Money - M3 and M4 Decreasing order of liquidity: M1- most liquid and easiest for transactions; M4-least liquid of all M3- most commonly used measure of money supply: aggregate monetary resources DEMONETISATION o Nov 2016- new initiative by Gol To Tackle issues like corruption, black money, terrorism and circulation of fake currency in economy o Old currency notes of Rs 500 and Rs 1000-> no longer legal tender o Launching of new currency notes in denomination of Rs 500 and Rs 2000