What is High Powered Money?

1. High powered money is the currency that is issued by the government and the Reserve Bank of India.

2. A portion of this fund is kept with the public and rest is kept in the RBI.

3. It is the total liability of the RBI.

4. The equation for high powered money is H = C + R

H is the high powered money

C is the Currency with the public including both paper currency and coins.

R is the Government and bank deposits with RBI.