Question : ________ is the currency in the hands of the public plus commercial bank reserves, also called ‘high-powered money’.
Option 1: Desired reserve ratio
Option 2: Excess reserves
Option 3: Monetary base
Option 4: Money multiplier
Correct Answer: Monetary base
Solution : The correct answer is the Monetary base
Other names for reserve money include high-powered money, monetary base, central bank money, and base money. It is either the foundation of the money supply or its most potent element. Reserve money is, to put it simply, currency in circulation plus deposits made to the RBI by commercial banks.
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