1.

What is the difference between narrow money and broad money?

Answer»

The differences between narrow money and broad money are as follows:

Narrow MoneyBroad Money
  • It includes currency held by the public and demand deposits held by the commercial banks and savings deposits with post office.
  • It includes currency with the public, demand deposits and net time deposits of commercial banks and total deposits with post office savings.
  • Its liquidity is high and easily available for transactions.
  • It has less liquidity.
  • Symbolically narrow money is M1 and M2.
  • Symbolically broad money is M3 and M4.



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