Question

The monetary base is equal to the sum of coins, :

a. currency and banks' reserves at the Federal Reserve.
b. currency and checkable deposits at banks.
c. currency, banks' reserves at the Federal Reserve and checkable deposits at banks.
d. U.S. government securities owned by the Federal Reserve and Feder

Answer 1

The Correct Answer is C.

Currency, banks' reserves at the Federal Reserve and check-able deposits at banks.

Step-by-step explanation:

• The monetary base is equivalent to the currency in circulation and also the reserves of the commercial banks.
• The monetary base is crucial because it makes available the institution for the money supply.
• The currency in distribution add to directly in the money supply, while bank reserves provide the underpinning for checking deposits.

Answer 2

Answer: Option 'c' is correct.

Step-by-step explanation:

The definition of the monetary base is that

monetary base is equal to the sum of currency, banks' reserves at the Federal Reserve and checkable deposits at banks.

It is not the sum of currency and banks' reserves at the Federal Reserve.

It is not currency and checkable deposits at banks.

It is not sum of U.S. government securities owned by the Federal Reserve.

Hence, Option 'c' is correct.