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CAIIB - ABM- CASE STUDIES / NUMERICAL QUESTIONS

The measures of money including Bank deposit with RBI, Demand deposit with the banking system, Term deposit of banking system, currency with public, and other deposits with RBI are shown as M0,M1,M2,M3.

1. The liabilities such as current deposits, demand liabilities portion of saving bank, margins held against letter of credit or bank guarantee, balances in overdue fixed deposits are included initially, in ......

a. M0
b. M1
c. M2
d. M3

Ans-b

2. The demand deposit of banks are included in ...... (i) M1, (ii) M2, (iii) M3

a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)

Ans - a

3. The term deposit of banks are included in ......(i) M1, (ii) M2, (iii) M3

a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)

Ans - c

4. Major portion of which of the following contains, interest free funds and is the most liquid part of money supply.

a. M0
b. M1
c. M2
d. M3

Ans - a
.....................................................

Given,

Currency with public - Rs. 90000 Crores
Demand deposit with banking system - Rs. 180000 Crores
Time deposits with banking system - Rs. 220000 Crores
Other deposit with RBI - Rs. 260000 Crores
Savings deposit of post office savings banks - Rs. 60000 Crores
All deposit with post office savings bank excluding NSCs - Rs. 50000 Crores

Calculate Narrow money M1.

a. Rs. 490000 Crores
b. Rs. 530000 Crores
c. Rs. 570000 Crores
d. Rs. 750000 Crores

Ans - b

Solution
M1 = currency with public + demand deposit with the banking system + other deposits with RBI
M1 = 90000+180000+260000
M1 = 530000
.............................................

Given,

Currency with public - Rs. 90000 Crores
Demand deposit with banking system - Rs. 180000 Crores
Time deposits with banking system - Rs. 220000 Crores
Other deposit with RBI - Rs. 260000 Crores
Savings deposit of post office savings banks - Rs. 60000 Crores
All deposit with post office savings bank excluding NSCs - Rs. 50000 Crores

Calculate M2.

a. Rs. 470000 Crores
b. Rs. 550000 Crores
c. Rs. 590000 Crores
d. Rs. 630000 Crores

Ans - c

Solution
M1 = currency with public + demand deposit with the banking system + other deposits with RBI
M1 = 90000+180000+260000
M1 = 530000
M2 = M1+Savings deposit of post office savings banks
So,
M2 = 530000+60000
M2 = 590000 Crores
.............................................

Given,

M2 - 700000 Crores
Currency with public - Rs. 100000 Crores
Demand deposit with banking system - Rs. 150000 Crores
Time deposits with banking system - Rs. 150000 Crores
Savings deposit of post office savings banks - Rs. 60000 Crores
All deposit with post office savings bank excluding NSCs - Rs. 50000 Crores

Calculate Other deposit with RBI

a. Rs. 240000 Crores
b. Rs. 250000 Crores
c. Rs. 390000 Crores
d. Rs. 400000 Crores

Ans - c

Solution :

M2 = M1+Savings deposit of post office savings banks
M1 = currency with public + demand deposit with the banking system + other deposits with RBI

So,
M2 = currency with public + demand deposit with the banking system + other deposits with RBI + Savings deposit of post office savings banks
Other deposit with RBI = M2 - currency with public - demand deposit with the banking system - Savings deposit of post office savings banks
Other deposit with RBI = 700000 - 100000 - 150000 - 60000
Other deposit with RBI = 390000 Crores
.............................................

Given,

Currency with public - Rs. 90000 Crores
Demand deposit with banking system - Rs. 180000 Crores
Time deposits with banking system - Rs. 220000 Crores
Other deposit with RBI - Rs. 260000 Crores
Savings deposit of post office savings banks - Rs. 60000 Crores
All deposit with post office savings bank excluding NSCs - Rs. 50000 Crores

Calculate broad money M3.

a. Rs. 490000 Crores
b. Rs. 530000 Crores
c. Rs. 570000 Crores
d. Rs. 750000 Crores

Ans - d

Solution :
M1 = currency with public + demand deposit with the banking system + other deposits with RBI
M1 = 90000+180000+260000
M1 = 530000

M3 = M1+Time deposit with banking system
So,
M3 = 530000+220000
M3 = 750000 Crores

……………………………………………………………………………………………………………………………………………

 


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