Total deposits with Post Office savings organisations are included in which money supply aggregate?

Question

Question

This question was previously asked in

SSC CGL 2022 Tier-I Official Paper (Held On : 09 Dec 2022 Shift 2)

Answer 1

The correct answer is M4.

Key Points

The Reserve Bank of India releases data for M1, M2, M3, and M4—four different measurements of the money supply.
The Post Office Savings are thus only included in M2 and M4.
The Post Office Savings Account (SB) is comparable to any savings account offered by a retail bank.
The minimum deposit amount is $500 and the minimum withdrawal amount is just $50. It offers a 4% interest rate.
A savings bank account can be opened by both adults and minors.
The M2 measurement of the money supply in India includes the savings deposits of post office savings banks, which gives it a bit more rigidity than the M1 measurement.

Additional Information

M1, M2, M3, and M4 were the four monetary aggregates that the RBI used to calculate the money supply between 1977 and 1998.
The idea of Reserve Money was also utilised by the central bank.
In India, the post office offers a deposit programme called the post office savings account.
To calculate and gauge the total supply of money in the market, the Reserve Bank of India (RBI) divides currency into four major categories, sometimes referred to as monetary aggregates. M0, M1, M2, and M4 are the numbers.