Question

Distinguish between high powered money and ordinary money

Answer 1

Money is the building base of any country's economy.In our country, there are also different types of money according to their economical characteristics.

Similarly,there are high powered money and ordinary money in our country's economy which are separate from each other on the basis of money regulation sources.

High powered money are regulated by the government and RBI itself.

And the other money sources or exchange mediums are known as the ordinary money sources.

Answer 2

The following are the differences between the high powered money and ordinary money.

Explanation:

The following are the differences between the high powered money and ordinary money:

• The high powered money is consist of the currency as well as the cash reserves with banks whereas the ordinary money is consist of currency and demand deposit (DD).
• The high powered money = R+C where R stands for currency with people and C stands for cash reserves of the banks.
• At the same time, ordinary money = R+D, where R stands for the currency with people and D stands for Demand Deposit.

Learn more:

What is a demand deposit

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