Q.From the following data, calculate M1 and M3 (in ₹ crore): Currency with the public = ₹500 crore; Demand deposits with banks = ₹300 crore; Other deposits with the RBI = ₹20 crore; Time deposits with banks = ₹800 crore.

M1 adds the three narrow-money components; M3 (broad money) then adds time deposits on top of M1. …

Step 1 — Compute M1. $M1 = \text{Currency with the public} + \text{Demand deposits with banks} + \text{Other deposits with the RBI}$

$M1 = 500 + 300 + 20 = ₹820\text{ crore}$

Step 2 — Compute M3. $M3 = M1 + \text{Time deposits with banks}$

$M3 = 820 + 800 = ₹1{,}620\text{ crore}$ …

Cross-check M3 by summing all four raw components directly in one step, rather than only building it up via …

A common mistake is including time deposits inside M1 — time deposits belong only from M3 onward, since M1 ('narrow money') is restricted strictly to …