The total liability of the monetary authority of India

Solution

Monetary base and high-powered money both include the total liability of RBI ·         The Monetary base includes bank reserve and currency in circulation. ·         High Power Money (Reserve Money or Base Money) – High power money is the base of money supply expansion in the economy. ·         High Power Money = C + OD + CR. C = Currency with the public OD = Other Deposits of the general public with the RBI (insignificant) CR = Cash Reserves of banks which consists of (i.) Cash with banks themselves and (ii) Bankers deposits with RBI.