Confused about what is High Powered Money in economics class 12. I will discuss high powered money concept, its meaning definition, and examples in detail.
This topic is concerned with the Money and Banking chapter of Macroeconomic class 12.
Let’s discuss it.
What do you mean by High Powered Money in Economics class 12
See, if we talk about India.
In India, the Reserve Bank of India has the sole right to publish and issue paper notes.
While the central government mint (publish) the coins currency and issue it through RBI in the economy.
So the whole stock of currency produced and issue in a country in the form of paper and notes and metal coins is the High Powered Money.
High Powered Money is also called the monetary base of a country.
Definition of High Powered Money
High Powered Money refers to the currency that includes coins and currency (paper) notes issued by the central bank in a country.S.K Aggarwal
High Powered money is money produced by the RBI and the government.Sandeep Garg
High Powered Money refers to the monetary base of base money in the country. It includes, i) currency held by the people, ii) cash reserves of the commercial banks with the RBI, and iii) vault cash of the commercial banks.T.R Jain
Components of High Powered Money
High Powered Money = The total currency circulating in the public + Plus the currency that is physically held in the vaults of commercial banks + Plus the commercial banks’ reserves, held in the central bank.