Question : Savings deposits with Post Office savings banks are included in which measure of money supply?
Option 1: M1
Option 2: M4
Option 3: M2
Option 4: M3
Correct Answer: M2
Solution : The correct answer is M2 .
Money supply M2 is calculated by adding savings deposits with the Post Office savings banks to M1. The distinction between M2 and M1 is made because savings deposits in post office banks are not as easily accessible or "liquid" as the funds held in demand deposits at commercial and cooperative banks.
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