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Which pair of monetary aggregates is classified as broad money?
AM2 and M4
BM3 and M4
CM1 and M2
DM1 and M3
Answer & Solution
Correct answer: B. M3 and M4
1. The aggregates run M1 through M4 in decreasing order of liquidity.
2. M1 and M2 are narrow money.
3. **M3 and M4** are broad money.
4. M1 is the most liquid and M4 the least, so any pairing that mixes the two groups misreads the classification.
_Source: NCERT Class 12 Introductory Macroeconomics, Ch 3 "Money and Banking", section 3.2 DEMAND FOR MONEY AND SUPPLY OF MONEY_
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