A family deposits ₹20,000 of cash into a fixed deposit at a bank. Then

M1 rises by ₹20,000 and M3 rises by ₹20,000Correct answerYour answerM1 and M3 both fall by ₹20,000Correct answerYour answerM1 falls by ₹20,000 and M3 does not changeCorrect answerYour answerNeither changesCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

Cash with the public (in M1) falls by 20,000.
Time deposits rise by 20,000, which are in M3 but not M1, so M3 stays the same.

Concept: Cash into a fixed deposit
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsThe supply of money: M1 to M4

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A family deposits ₹20,000 of cash into a fixed deposit at a bank. Then

Explanation