UP PGT Money & Banking 05: Money Supply: Aggregates, Monetary Base & Determinants | Notes + 12 MCQs

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UP PGT Economics · Subject Code 11 · Money & Banking

Money Supply: Aggregates, Monetary Base & Determinants

Topic 05 / 1212 original revision MCQsHindi + English

पहले notes और solved examples, फिर options चुनकर Submit & Check Answers करें। Answers/explanations केवल इसी topic के Submit के बाद खुलेंगे। All numerical data and reserve/policy ratios in exercises are hypothetical teaching assumptions, not live rates.

Money supply किसी date पर eligible monetary assets का stock है। “Money in banks” को बिना definition जोड़ना गलत होगा: public deposits और banks के settlement reserves अलग aggregates में आते हैं। पहले question में requested aggregate पहचानें।

Conventional Indian aggregateComponents / definition
M₀ / reserve moneyCurrency in circulation + bankers’ deposits with RBI + other deposits with RBI
M₁ / narrow moneyCurrency with public + demand deposits with banking system + other deposits with RBI
M₂M₁ + savings deposits with post-office savings banks
M₃ / broad moneyM₁ + time deposits with banking system
M₄M₃ + all deposits with post-office savings banks, excluding National Savings Certificates

These are conventional M aggregates; do not mix them with separately defined NM/liquidity aggregates. Currency in circulation includes bank vault cash; currency with public excludes that vault cash।

Simplified Money Multiplier

Elementary model में C=public currency, D=eligible demand deposits, R=total bank reserves, c=C/D, r=R/D और H=C+R हों। Other RBI deposits are omitted in this simplified model.

M=C+D; H=C+R; m=M/H=(1+c)/(c+r); M=mH

Worked example: H=200, c=.20, r=.10 → m=1.20/.30=4 → M=800। D=200/.30=666.67, C=133.33, R=66.67।

Interpretation: r यहाँ total reserve/deposit ratio है, सिर्फ statutory CRR जरूरी नहीं। H और monetary-aggregate definitions consistent रखें।

  • Determinants: monetary base; public currency preference c; banks’ required plus excess reserve ratio r; lending demand, capital constraints और policy/institutional conditions।
  • For fixed H and 0≤r<1, higher c lowers this model’s multiplier; higher r also lowers it. A fall in multiplier can offset a rise in base।
  • Deposits public से public transfer करने या cash को deposit में बदलने से narrow money mechanically fresh amount से नहीं बढ़ता; new lending and balance-sheet changes अलग analyse करें।

Official reference: RBI Handbook of Statistics: monetary aggregates definitions (29 August 2025). Institutional definitions checked 25 October 2026; current numerical policy rates deliberately excluded.

Simplified model: at c0, m10; at c.20, m4; at c.50, m2.5. With total r.10 fixed, higher public currency preference reduces the multiplier. No current RBI ratio is asserted.0.20.512.54100Public currency/deposit ratio cMoney multiplier m
━ m=(1+c)/(c+.10); total reserve ratio r=.10 fixed
Simplified model: at c0, m10; at c.20, m4; at c.50, m2.5. With total r.10 fixed, higher public currency preference reduces the multiplier. No current RBI ratio is asserted.

Active Recall / Writing Practice

  1. M₀, M₁, M₃ का component map लिखें।
  2. m=(1+c)/(c+r) को M=C+D और H=C+R से derive करें।

Notes बन्द करके लिखें। Review next day, third day और seventh day. File delivery, study attendance और mastery अलग हैं।

Memory recap: Define aggregate first; simplified M=mH; public cash and bank reserves matter।

Topic Test · 12 MCQs

Original revision questions, official PYQs या full official-pattern mock नहीं। Practice scoring +1 correct, 0 wrong/blank; no claim about official marking. Client-side answers inspectable हैं; this is not a secure examination platform.

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0 / 12 answered

1 / 12 · MONEY B049
Currency with public200, demand deposits500, other RBI deposits10 हैं। Conventional M1 कितना है?
2 / 12 · MONEY B050
M1=710 और banking-system time deposits1,000 हों। Conventional M3 कितना है?
3 / 12 · MONEY B051
Currency in circulation1,000, bankers’ RBI deposits200, other RBI deposits10 हैं। Reserve money M0 कितना है?
4 / 12 · MONEY B052
Simplified model c=.20,r=.10 देता है। Money multiplier कितना है?
5 / 12 · MONEY B053
H200,c.20,r.10 हो। Simplified money stock कितना है?
6 / 12 · MONEY B054
c=.50,r=.10 हो। Simplified m कितना है?
7 / 12 · MONEY B055
No public currency c0 और r.20 हो। Simplified m होगा:
8 / 12 · MONEY B056
Consistent simplified M900 और H300 दिए हैं। Observed multiplier कितना है?
9 / 12 · MONEY B057
Fixed H और0≤r<1 के model में public currency preference c बढ़े। m पर effect?
10 / 12 · MONEY B058
m=(1+c)/(c+r) में r की सही interpretation क्या है?
11 / 12 · MONEY B059
Currency in circulation1,000 और bank vault cash150 हो। Currency with public कितनी है?
12 / 12 · MONEY B060
Public existing cash100 bank में जमा करता है; C100 गिरता,D100 बढ़ता है। Immediate simplified M=C+D change?

Numerical routine: concept → formula → substitute → interpret. Wrong/guessed/slow items को 24 hours बाद new attempt दें।