Multiple choice

High -powered money is produced by:

  1. Commercial banks

  2. Co-operative banks

  3. Ministry of Finance

  4. Reserve Bank of India
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

High-powered money (monetary base) consists of currency held by the public and bank reserves. Only the central bank (Reserve Bank of India in the Indian context) can create high-powered money through currency issuance and open market operations. Commercial banks create deposit money through lending, but this is derived money that multiplies the high-powered money base.

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