Description
sources of monney stock (M3), constituents of WPI, constituents of CPI, difference between CPI and WPI.
MONEY SUPPLY AND INFLATION
Click to edit Master subtitle style
Money Stock measures (RBI)
M1 = Notes, Rupee coins, small coins in circulation + Cash in hand with banks + Demand deposits with banks + ‘Other’ deposits with Reserve Bank
M2 = M1+ CDs issued by banks + term deposits (1 yr) M3 = M2 + Term deposits (over 1 yr) + call/term borrowings of banks
Sources of Money Stock (M3)
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Net Bank Credit to Government (A+B) A) RBI’s net credit to Government B) Other Banks’ Credit to Government Bank Credit to Commercial Sector (A+B) A) RBI’s credit to commercial sector B) Other banks’ credit to commercial sector Net Foreign Exchange Assets of Banking Sector (A+B) A) RBI’s net foreign exchange assets B) Other banks’ net foreign exchange assets
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Government Currency Liabilities to the public
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Banking Sector’s net non-monetary liabilities
Index Numbers
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Index numbers are values expressed as a percentage of a single base figure. For example, if annual production of a particular chemical rose by 35%, in index terms, output in the two years was 100 and 135 respectively. Index numbers have no units.
WPI Constituents
All Commodities 100.000
Primary Articles (22.025)
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Food Articles (15.042)
Fuel, Power, Light and Lubricants (14.226)
Non Food •Rubber and plastic articles products (2.388) (6.138) • Paper and paper products • Minerals (2.044) (0.485) • Beverages, tobacco and tobacco products (1.339)
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Manufactured Products (63.749) • Chemicals and chemical products (11.931 • Food Products (11.548) • Textiles (9.800) • Machinery and machine tools (8.363) •Basic metals, alloys and metal products (8.3420 • Transport equipment and parts (4.295) • Non metallic mineral products (2.516)
Wood and wood products (0.173)
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CPI Constituents
All Commodities 100.000
Food Beverages and Tobacco(60.15 Fuel and ) Light (6.28) Miscellaneous (16.46)
Housing(8.67)
Clothing and Footwear(8.54)
Difference between WPI and CPI
WPI Covers 447 commodities Does not include services Base yr :- 1993-94 CPI Covers 260 commodities Includes services Base yr for
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CPI (UNME):-1960 CPI(IW) : 1982 CPI(AL) & CPI (RL) :1986-87
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Measure price changes of wholesale transactions Production oriented Weights assigned to items are in terms of value of output in economy Single national index
•
• •
•
Measures price changes in consumer (retail) prices Consumption oriented Weights assigned in terms of share in total consumption expenditure of the families Regional
MONETARY POLICY IN UK
doc_485412385.pptx
sources of monney stock (M3), constituents of WPI, constituents of CPI, difference between CPI and WPI.
MONEY SUPPLY AND INFLATION
Click to edit Master subtitle style
Money Stock measures (RBI)
M1 = Notes, Rupee coins, small coins in circulation + Cash in hand with banks + Demand deposits with banks + ‘Other’ deposits with Reserve Bank
M2 = M1+ CDs issued by banks + term deposits (1 yr) M3 = M2 + Term deposits (over 1 yr) + call/term borrowings of banks
Sources of Money Stock (M3)
•
Net Bank Credit to Government (A+B) A) RBI’s net credit to Government B) Other Banks’ Credit to Government Bank Credit to Commercial Sector (A+B) A) RBI’s credit to commercial sector B) Other banks’ credit to commercial sector Net Foreign Exchange Assets of Banking Sector (A+B) A) RBI’s net foreign exchange assets B) Other banks’ net foreign exchange assets
•
•
•
Government Currency Liabilities to the public
•
Banking Sector’s net non-monetary liabilities
Index Numbers
•
•
•
Index numbers are values expressed as a percentage of a single base figure. For example, if annual production of a particular chemical rose by 35%, in index terms, output in the two years was 100 and 135 respectively. Index numbers have no units.
WPI Constituents
All Commodities 100.000
Primary Articles (22.025)
•
Food Articles (15.042)
Fuel, Power, Light and Lubricants (14.226)
Non Food •Rubber and plastic articles products (2.388) (6.138) • Paper and paper products • Minerals (2.044) (0.485) • Beverages, tobacco and tobacco products (1.339)
•
Manufactured Products (63.749) • Chemicals and chemical products (11.931 • Food Products (11.548) • Textiles (9.800) • Machinery and machine tools (8.363) •Basic metals, alloys and metal products (8.3420 • Transport equipment and parts (4.295) • Non metallic mineral products (2.516)
Wood and wood products (0.173)
•
CPI Constituents
All Commodities 100.000
Food Beverages and Tobacco(60.15 Fuel and ) Light (6.28) Miscellaneous (16.46)
Housing(8.67)
Clothing and Footwear(8.54)
Difference between WPI and CPI
WPI Covers 447 commodities Does not include services Base yr :- 1993-94 CPI Covers 260 commodities Includes services Base yr for
• • •
• • •
CPI (UNME):-1960 CPI(IW) : 1982 CPI(AL) & CPI (RL) :1986-87
•
• •
•
Measure price changes of wholesale transactions Production oriented Weights assigned to items are in terms of value of output in economy Single national index
•
• •
•
Measures price changes in consumer (retail) prices Consumption oriented Weights assigned in terms of share in total consumption expenditure of the families Regional
MONETARY POLICY IN UK
doc_485412385.pptx