Question
Which of the following are part of Monetary Base of an economy?
Select the correct answer using the code given below:
- Currency notes and coins with the public
- Vault cash of commercial banks
- Deposits of commercial banks with RBI
- Deposits of Government of India with RBI
Select the correct answer using the code given below:
Answer: Option D
Answer: (d)
Monetary Base or High-Powered Money is the total liability of the Monetary Authority of India i.e. RBI.
All the currency notes and coins issued by RBI does not matter who is holding them, is always the liability of RBI. When Government and banks deposit their money with RBI, it becomes the liability of RBI. (In the same way as when you deposit money in your bank, then the deposits become the bank’s liability towards you).
For a detailed understanding, you can refer to the book on Indian Economy by Vivek Singh.
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Answer: (d)
Monetary Base or High-Powered Money is the total liability of the Monetary Authority of India i.e. RBI.
All the currency notes and coins issued by RBI does not matter who is holding them, is always the liability of RBI. When Government and banks deposit their money with RBI, it becomes the liability of RBI. (In the same way as when you deposit money in your bank, then the deposits become the bank’s liability towards you).
For a detailed understanding, you can refer to the book on Indian Economy by Vivek Singh.
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