Introduction
High powered money refers to the monetary base that is controlled by the central bank of a country. This includes physical currency and reserves held by commercial banks in the central bank. The creation of credit by commercial banks is based on this high powered money. Therefore, any curb on high powered money will have an impact on the creation of credit by commercial banks. In this essay, we will discuss whether a curb on high powered money will lead to a curb on the creation of credit by commercial banks in the economy.

Effects of Curb on High Powered Money
A curb on high powered money will have the following effects:

1. Reduced Reserves: If the central bank imposes a curb on high powered money, it will reduce the reserves held by commercial banks in the central bank. This will reduce the ability of commercial banks to create credit.

2. Increased Interest Rates: If there is a curb on high powered money, it will lead to an increase in interest rates. This is because commercial banks will have less access to reserves and will therefore have to pay higher interest rates to borrow funds. This will make it more expensive for banks to create credit.

3. Reduced Money Supply: A curb on high powered money will lead to a reduction in the money supply. This is because commercial banks will have less access to reserves and will therefore have less ability to create credit. This will lead to a contraction in the economy.

Conclusion
In conclusion, it is clear that a curb on high powered money will lead to a curb on the creation of credit by commercial banks in the economy. This is because commercial banks rely on high powered money to create credit. A curb on high powered money will reduce the ability of commercial banks to create credit, increase interest rates and reduce the money supply. Therefore, any policy that aims to curb high powered money should be implemented with caution to avoid negative impacts on the economy.

The tax are imposed on various types viz proportional regressive and progressive tax system