Question : High-powered money includes:
Option 1: Currency and Coins held by the public
Option 2: Currency, cash reserves with banks, and demand deposits
Option 3: Currency and coins held by the public and deposits held by government and commercial banks
Option 4: Currency and demand deposits
Correct Answer: Currency and coins held by the public and deposits held by government and commercial banks
Solution : The correct answer is (c) Currency and coins held by the public and deposits held by government and commercial banks.
High-powered money, also known as the monetary base or narrow money. Currency and coins held by the public refers to physical currency notes and coins that are in circulation and held by individuals and non-bank entities.
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