ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Currency and coins held by the public
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Currency and demand deposits
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Currency, cash reserves with banks and demand deposits
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Currency held by the public and cash reserves with banks.
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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: -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-4: -Reserve money is the most important form of money supply. It is also called as high-powered money, base money and central bank money. All these names suggest that reserve money represents the base level for money supply or it is the high-powered component of money supply.
Detailed explanation-5: -The correct answer is Currency with public + Cash Reserves of Banks.