High-powered money:
High-powered money is a macroeconomic term
referring to the monetary base, which is controlled by the institution in a
country that controls monetary policy. This is usually either the finance
ministry or the central bank.
The monetary base is called high-powered
because the magnitude of changes in monetary base are greatly magnified by the
money multiplier.
As an example, a 1% increase in monetary
base may lead to a 10% increase in the money supply due to money multipler
effects.
In economics, broad
money is a measure of the money
supply that includes more than just physical money such as currency and
coins (also termed narrow money). It generally includes demand
deposits at commercial banks, and any monies held in easily accessible
accounts. Components of broad money are still very liquid, and non-cash
components can usually be converted into cash very easily.