Economics · Money and Banking
High-powered money differs fundamentally from the aggregate money supply because it:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Includes only the currency held by the general public
- 2Consists strictly of demand deposits in the banking system
- 3Acts as the monetary base for credit creation by commercial banks✓
- 4Excludes the currency notes and coins issued by the government
Correct answer
Acts as the monetary base for credit creation by commercial banks
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