Which is the correct expression for currency in circulation?
A)Federal Reserve Notes outstanding + Treasury currency outstanding - banks' vault cash
B)Federal Reserve Notes outstanding + Treasury currency outstanding + banks' vault cash
C)Federal Reserve Notes outstanding + banks' vault cash - Treasury currency outstanding
D)Treasury currency outstanding - (Federal Reserve Notes outstanding + banks' vault cash)

Question

Quizplus · Accepted Answer

Currency in circulation refers to the total amount of physical currency, such as bills and coins, that is in the hands of the public. This includes both Federal Reserve Notes (issued by the Federal Reserve) and Treasury currency (issued by the U.S. Treasury). However, banks also hold a certain amount of cash in their vaults, which is not considered to be in circulation. Therefore, to calculate currency in circulation, we must subtract banks' vault cash from the total amount of Federal Reserve Notes and Treasury currency outstanding, which is represented by choice A.

Which Is the Correct Expression for Currency in Circulation