High powered money includes

BANKING GENERAL KNOWLEDGE

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

A	currency and demand deposits
B	demand deposits and saving deposits
C	currency held by the public and the cash reserves with banks
D	None of these

Explanation:

Detailed explanation-1: -The total liability of the monetary authority of the country, RBI, is called high powered money. It consists of currency in circulation with public, deposits held by the government and commercial banks.

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.

Detailed explanation-3: -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-4: -Liquidity Aggregates M1 = Currency with the public + Demand deposits with the banking system + ‘Other’ deposits with the RBI.

Detailed explanation-5: -The correct answer is Currency with public + Cash Reserves of Banks.

There is 1 question to complete.