If Treasury currency outstanding increases, the monetary base will
A)increase, provided the increase in currency is held by banks.
B)increase, provided the increase in currency is held by the public.
C)increase whether the increase in currency is held by banks or by the public.
D)decrease.

Question

Quizplus · Accepted Answer

The monetary base includes currency in circulation among the public and reserves held by banks. An increase in Treasury currency outstanding, whether held by banks or the public, directly increases the amount of currency in circulation, thus increasing the monetary base.

If Treasury Currency Outstanding Increases, the Monetary Base Will