High powered money consists of:

BANKING GENERAL KNOWLEDGE

Please wait while the activity loads.
If this activity does not load, try refreshing your browser. Also, this page requires javascript. Please visit using a browser with javascript enabled.

If loading fails, click here to try again

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A	Currency and coins held by the public
B	Currency and demand deposits
C	Currency, cash reserves with banks and demand deposits
D	Currency held by the public and cash reserves with banks.

Explanation:

Detailed explanation-1: -High-powered money is the sum of commercial bank reserves and currency (notes and coins) held by the Public. High-powered money is the base for the expansion of Bank deposits and creation of money supply. A commercial bank’s reserves depend upon its deposits.

Detailed explanation-2: -High powered money consists of currency and coins held by the public and deposits held by government and commercial banks. High powered money is a total liability of the monetary authority of the country. Was this answer helpful?

Detailed explanation-3: -Liquidity Aggregates M1 = Currency with the public + Demand deposits with the banking system + ‘Other’ deposits with the RBI.

Detailed explanation-4: -The correct answer is Currency with public + Cash Reserves of Banks.

Detailed explanation-5: -Ans: Yes, the given statement is correct . This is because high powered money includes currency with the public as well as cash reserves of the commercial banks with the RBI. It serves as a monetary base for the creation of credit in the economy.

There is 1 question to complete.