The monetary base is the sum of
A) coins, currency, and checkable deposits.
B) foreign and domestic deposits at the Fed.
C) Federal Reserve notes, coins, and deposits of depository institutions.
D) U.S. Treasury notes and other government securities.

Question

Quizplus · Accepted Answer

The monetary base is composed of Federal Reserve notes (i.e. cash and coins in circulation), deposits held by depository institutions (i.e. reserves held by banks at the Fed), and coins minted by the U.S. Treasury. Therefore, choice C is the correct answer. Choices A, B, and D are incorrect as they do not accurately reflect the components of the monetary base.

The Monetary Base Is the Sum of