The monetary base is
A) currency and reserves of depository institutions.
B) currency minus depository institutions' reserves.
C) depository institutions' reserves minus Federal Reserve notes.
D) the money borrowed by banks from other banks.

Question

Quizplus · Accepted Answer

The monetary base consists of currency (notes and coins in circulation with the public and in the vaults of banks) and the reserves held by depository institutions at the central bank. These reserves are used to meet the reserve requirements set by the central bank and for clearing financial transactions.

The Monetary Base Is