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      Question

      Which of the following is component of reserve

      money? i. Currency in circulation   ii. Bankers’ deposit with RBI iii. Other deposits with RBI
      A Only i Correct Answer Incorrect Answer
      B Only i & ii Correct Answer Incorrect Answer
      C Only ii & iii Correct Answer Incorrect Answer
      D Only iii Correct Answer Incorrect Answer
      E All three Correct Answer Incorrect Answer

      Solution

      It is essentially the central bank's money. It is also called high-powered money, base money and central bank money. As per the definition, reserve money equals currency in circulation plus bankers' deposits with RBI plus 'other' deposits with RBI. It is the base level for money supply or the high-powered component of money supply.

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