1. M1 Component of Money Supply:
This component of money supply refers to:
(a) Currency, C, including paper money and metallic coins of all denominations,
(b) Net demand deposits, DD, including the savings deposits with the banking sector, and
(c) Other Deposits, OD, including the deposits with RBI of quasi-government institutions such as Industrial Finance Corporation of India, State Finance Corporations, Industrial Development Bank of India, Agricultural Refinance and Development Corporation; deposits of International Monetary Fund (IMF) in Account No.2
2. M2 Component of Money Supply:
This component of money supply is devised to include post office savings deposits in the M2component of money supply. Thus,
M2 = M1 + Post Office Savings Deposits
3. M3 Component of Money Supply:
M3 is the sum of M1 and the time deposits. Hence, it represents a broader measure of money supply and is known as the Aggregate Monetary Resource (AMR). Thus,
M3 = M1 + Time Deposits
= M1 + TD
4. M4 Component of Money Supply:
M4 is the sum of M3 and the Post Office Savings Deposits. It represents broader concept of money supply. Thus,
M4 = M3 + Post Office Savings Deposits
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