The monetary base is the sum of
A) coins, currency, and checkable deposits.
B) Federal Reserve notes, coins, and deposits of depository institutions.
C) U.S. Treasury notes and other government securities.
D) foreign and domestic deposits at the Fed.

Question

Quizplus · Accepted Answer

The monetary base, also known as the high-powered money, is the sum of Federal Reserve notes (paper currency), coins, and deposits of depository institutions (i.e., banks) at the Federal Reserve. Therefore, choice B is the correct answer. Choices A and C do not include deposits at the Fed, while choice D includes foreign deposits, which are not part of the U.S. monetary base.

The Monetary Base Is the Sum of