The RBI calls it 'reserve money'. It is a sum of i) Currency held by the public (C) ii) Cash reserves…
Reserve money comprises currency held by the public, banks' cash reserves and other deposits with RBI. Hence all three components are included, giving \(C+R+OD\). Bank…
Choose your answer
The RBI calls it 'reserve money'. It is a sum of
i) Currency held by the public (C)
ii) Cash reserves of the banks (R)
iii) 'Other deposits' (OD) of RBI
Answer and explanation
Correct answer A
Reserve money comprises currency held by the public, banks' cash reserves and other deposits with RBI. Hence all three components are included, giving . Bank reserves cover vault cash and balances with RBI.
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Karnataka SET (KSET)