Goods market



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Base Money:




  1. Currency in circulation (CIC):


    1. Currency issued by the Central Bank - notes & coins,

    2. IOU from the Central Bank to the consumers in the economy



  1. Central Bank reserves:


    1. Statutory reserves required by commercial banks to be

maintained with the Central Bank (e.g.: CRR, SLR balances form HQLA)

    1. IOUs from the Central Bank, on behalf of govt, to the commercial banks

Broad money





  • Money circulating in the economy, available for transactions.

  1. Currency with public = CIC - Cash balances held by banks




  1. Bank deposits = Savings deposits (or demand deposits) + Term

deposits (or time deposits)


created by commercial banks themselves - > we shall cover later

In India, the following monetary aggregates are used-




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