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What do you understand by the term "High powered money"? |
Includes demand deposits and time deposits Includes currency held by the public and cash reserves with banks Includes currency and demand deposits None of the above |
Includes currency held by the public and cash reserves with banks |
The correct answer is Option 2: Includes currency held by the public and cash reserves with banks
High-powered money, also known as monetary base or base money.High powered money is the total liability of the monetary authority of the country i.e.RBI. It is often called as "The monetary base".
High powered money = Currency with public + Reserves with banks
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