Macro

Money & Banking

Medium

High powered money comprises of :

Notes and coins in circulation with Public and Vault cash of Commercial Banks and deposits held by Government and Commercial Banks with RBI.

Notes and coins in circulation with Public and deposits held by Government.

Currency and deposits held by bank with RBI.

Notes and Vault cash of Commercial Banks.

✅ Correct Option: 1

High powered money (M0 or reserve money) = Currency (notes and coins) in circulation with the public + Vault cash of commercial banks + Deposits held by the Government and commercial banks with the RBI. Option A captures all these components.

2022: 15 July Shift 2

What will be the amount of initial reserves if Cash Reserve Ratio (CRR) is 20 % and total credit creation is Rs 500?

2025: 30 May Shift 1

Arrange the following steps involved in the process of credit creation by Commercial Banks.

(A) The commercial bank lends the excess reserves to the borrowers.

(B) The borrowers deposit the loaned money in the bank.

(D) The initial deposit is made in the commercial bank.

Choose the correct answer from the options given below:

2025: 29 May Shift 1

If the reserve ratio is 20%, what is the money multiplier?

2026: 21 May Shift 1

Which of the following options correctly explains the functions of money?

(A) Medium of exchange

(B) Measure of account

(D) Quality measuring standard

Choose the correct answer from the options given below:

2023: 30 May Shift 1

If Cash Reserve Ratio is 20%, what will be the value of money multiplier ?

2026: 12 May Shift 1

Which among the following limits the money multiplier process?

High powered money comprises of :

Solution

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