1
Question
What is
High Powered Money?
What is High Powered Money?
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Solution
High
powered money is the total liability of the monetary authority of the
country. This is also called the monetary base and is created by the
RBI. High powered money includes currency (notes and coins), deposits
with the government and reserves of commercial banks
with RBI. So, to sum up, high powered money is
H =
C + R
Where
H −
High powered money
C −
Currency
R −
Cash Reserves of commercial banks
High powered money is the total liability of the monetary authority of the country. This is also called the monetary base and is created by the RBI. High powered money includes currency (notes and coins), deposits with the government and reserves of commercial banks with RBI. So, to sum up, high powered money is
H = C + R
Where
H − High powered money
C − Currency
R − Cash Reserves of commercial banks
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