Chicago Approach Definition of Money Supply
The definition of the money supply varies across different economic approaches. Understanding these differences is crucial for economic analysis.
Key Concept: Time Deposits Inclusion
- The question asks which approach includes Time Deposits with commercial banks in its definition of money supply.
- The Chicago Approach is known for its broader definition of money.
- This approach, associated with economists like Milton Friedman, considers time deposits (like savings and fixed deposits) as part of the money supply because they are readily convertible into demand deposits or currency and serve as a store of value.
- Other approaches, like the conventional or narrower definitions, often exclude time deposits as they are not typically used directly for transactions.
Correct Answer Identification
Based on the definition, the Chicago Approach is the one that includes time deposits with commercial banks in the definition of money supply.
Therefore, the correct option is The Chicago Approach.
Important Questions from Money and Banking
Dr. Urjit Patel, who has been appointed recently as Governor of Reserve Bank of India, was holding which position immediately prior to this appointment?
As per the RBI guidelines, which one of the following is the minimum tenure of Masala Bonds that an Indian company can issue offshore?
______ is a tax system that collects a greater share of income from those with high incomes than from those with lower incomes.
In which year had India's ratio of public debt to GDP gone up to a record 84.2%?
______ is an economic scenario where a peculiar combination of low growth and rising inflation leads to high unemployment.
