The relationship between advances to banks, the nonborrowed monetary base, and the monetary base is ________.

Question

Quizplus · Accepted Answer

The relationship between advances to banks, the nonborrowed monetary base, and the monetary base is that advances to banks (BR) equal the monetary base (MB) minus the nonborrowed monetary base (MB_n): BR = MB - MB_n. This equation highlights the fact that advances to banks increase the monetary base by injecting additional reserves into the banking system.

The Relationship Between Advances to Banks, the Nonborrowed Monetary Base