The term 'Monetary Base' or 'High-Powered Money' consists of:
A. Currency with public and reserves of banks with RBI
B. Only government securities
C. Only time deposits
D. Only demand deposits
Answer: Option A
Solution (By JKSSB Mock Tests)
High-powered money (monetary base) consists of currency held by the public and the reserves (cash and deposits) of commercial banks with the central bank.
Explanation:
The natural rate hypothesis, associated with Friedman and Phelps, states that in the long run the economy returns to the natural rate of unemployment and there is no permanent trade-off with inflation.
Explanation:
Average inflation targeting commits the central bank to achieve an average inflation rate over a longer period, so that periods of below-target inflation are followed by periods of above-target inflation (and vice versa).
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