{"id":1988,"date":"2024-03-31T00:27:15","date_gmt":"2024-03-30T18:57:15","guid":{"rendered":"https:\/\/lotusarise.com\/qna\/?p=1988"},"modified":"2024-04-03T07:00:59","modified_gmt":"2024-04-03T01:30:59","slug":"q-consider-the-following-liquid-assets","status":"publish","type":"post","link":"https:\/\/lotusarise.com\/qna\/upsc\/q-consider-the-following-liquid-assets","title":{"rendered":"Q.\u00a0Consider the following liquid assets:"},"content":{"rendered":"\n
    \n
  1. Demand deposits with the banks<\/li>\n\n\n\n
  2. Time deposits with the banks<\/li>\n\n\n\n
  3. Savings deposits with the banks<\/li>\n\n\n\n
  4. Currency<\/strong><\/li>\n<\/ol>\n\n\n\n

    The correct sequence of these assets in the decreasing order of liquidity<\/strong> is<\/p>\n\n\n\n

      \n
    • 1-4-3-2<\/li>\n\n\n\n
    • 4-3-2-1<\/li>\n\n\n\n
    • 2-3-1-4<\/li>\n\n\n\n
    • 4-1-3-2<\/li>\n<\/ul>\n\n\n\n
      \n

      Answer: (d) 4-1-3-2<\/strong><\/p>\n<\/blockquote>\n\n\n\n

      Money Supply:<\/h5>\n\n\n\n
        \n
      • The money supply is the total amount of currency and other liquid assets in a country\u2019s economy on a given date.<\/strong>\u00a0Cash and deposits that can be utilised almost as quickly as cash are included in the money supply.\n
          \n
        • It needs to be noted that total stock of money is different from total supply of money.<\/strong><\/li>\n\n\n\n
        • Supply of money is only that part of total stock of money<\/strong> which is held by the public at a particular point of time.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
        • The circulating money involves the currency, printed notes, money in the deposit accounts and in the form of other liquid assets.<\/strong><\/li>\n\n\n\n
        • Money supply is typically categorized into different measures or aggregates, each representing a different component of the overall money stock.\n
            \n
          • Different monetary aggregates<\/strong>, such as M0, M1, M2, M3, M4<\/strong>, and so on, are used to measure and express the money supply.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
          • RBI publishes figures for four alternative measures of money supply, viz. M1, M2, M3 and M4.\n
              \n
            • M1 = CU + DD<\/li>\n\n\n\n
            • M2 = M1 + Savings deposits with Post Office savings banks<\/li>\n\n\n\n
            • M3 = M1 + Net time deposits of commercial banks<\/li>\n\n\n\n
            • M4 = M3 + Total deposits with Post Office savings organisations (excluding National Savings Certificates)<\/li>\n<\/ul>\n<\/li>\n\n\n\n
            • CU is currency (notes plus coins) held by the public<\/strong>, and DD is net demand deposits held by commercial banks.<\/strong><\/li>\n\n\n\n
            • The word \u2018net\u2019 implies that only deposits of the public held by the banks are to be included in money supply.\n
                \n
              • The interbank deposits, which a commercial bank holds in other commercial banks, are not to be regarded as part of money supply.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
              • M1 and M2<\/strong> are known as narrow money. M3 and M4 are known as broad money.<\/strong><\/li>\n\n\n\n
              • These gradations are in decreasing order of liquidity.<\/strong>\n
                  \n
                • M1 is most liquid and easiest for transactions<\/strong> whereas M4 is least liquid of all.<\/li>\n\n\n\n
                • M3 is the most commonly used measure of money supply. It is also known as aggregate monetary resources.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
                • India\u2019s central bank, the Reserve Bank of India (RBI), employs various tools such as Open Market Operations, CRR, SLR, Repo Rate, Reverse Repo Rate,<\/strong> etc. to manage money supply.<\/li>\n<\/ul>\n\n\n\n
                  \"Money<\/figure>\n\n\n\n
                  \"different<\/figure>\n\n\n\n
                  Currency in Circulation<\/h6>\n\n\n\n
                    \n
                  • Currency in circulation\u00a0refers to cash or currency within a country that is physically used to conduct transactions<\/strong>\u00a0between consumers and businesses.\n
                      \n
                    • Monetary authorities of central banks pay attention to the amount of physical<\/strong> currency<\/strong> in circulation because it represents one of the most liquid asset classes.<\/strong><\/li>\n<\/ul>\n<\/li>\n\n\n\n
                    • Currency in Circulation includes notes in circulation, rupee coins and small coins.<\/strong><\/li>\n\n\n\n
                    • The RBI has the sole right to issue currency notes.<\/strong> The Government of India is the issuing authority of coins and supplies coins to the Reserve Bank on demand.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"

                      The correct sequence of these assets in the decreasing order of liquidity is Answer: (d) 4-1-3-2 Money Supply: Currency in Circulation<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_kad_blocks_custom_css":"","_kad_blocks_head_custom_js":"","_kad_blocks_body_custom_js":"","_kad_blocks_footer_custom_js":"","_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[1,3],"tags":[38],"years":[60],"class_list":["post-1988","post","type-post","status-publish","format-standard","hentry","category-upsc","category-prelims","tag-indian-economy","years-60"],"acf":[],"taxonomy_info":{"category":[{"value":1,"label":"UPSC"},{"value":3,"label":"Prelims"}],"post_tag":[{"value":38,"label":"Indian Economy"}],"years":[{"value":60,"label":"2013"}]},"featured_image_src_large":false,"author_info":{"display_name":"LotusArise","author_link":"https:\/\/lotusarise.com\/qna\/author\/team-lotusarise"},"comment_info":0,"category_info":[{"term_id":1,"name":"UPSC","slug":"upsc","term_group":0,"term_taxonomy_id":1,"taxonomy":"category","description":"","parent":0,"count":1269,"filter":"raw","cat_ID":1,"category_count":1269,"category_description":"","cat_name":"UPSC","category_nicename":"upsc","category_parent":0},{"term_id":3,"name":"Prelims","slug":"prelims","term_group":0,"term_taxonomy_id":3,"taxonomy":"category","description":"","parent":1,"count":1251,"filter":"raw","cat_ID":3,"category_count":1251,"category_description":"","cat_name":"Prelims","category_nicename":"prelims","category_parent":1}],"tag_info":[{"term_id":38,"name":"Indian Economy","slug":"indian-economy","term_group":0,"term_taxonomy_id":38,"taxonomy":"post_tag","description":"","parent":0,"count":225,"filter":"raw"}],"_links":{"self":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts\/1988","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/comments?post=1988"}],"version-history":[{"count":0,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts\/1988\/revisions"}],"wp:attachment":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/media?parent=1988"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/categories?post=1988"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/tags?post=1988"},{"taxonomy":"years","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/years?post=1988"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}