Question:
High powered money includes
(1) time deposits held by the public at commercial banks.
(2) savings deposits held by the public at licensed banks and finance companies.
(3) currency held by public and reserves of commercial banks.
(4) loans issued by commercial banks.
(5) foreign assets held by the Central Bank.
Correct Answer:
(3)
Answer Explanation:
High Powered Money (also known as Reserve Money or the Monetary Base) represents the direct liability of the Central Bank. It consists strictly of the physical currency in circulation (notes and coins held by the public) plus the commercial banks’ reserve balances held at the Central Bank.
Topic: Money and Banking Year: 2024
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