Real money balances equal the:
A) sum of coin, currency, and balances in checking accounts.
B) amount of money expressed in terms of the quantity of goods and services it can purchase.
C) number of dollars used as a medium of exchange.
D) quantity of money created by the Federal Reserve.

Question

Quizplus · Accepted Answer

Real money balances refer to the purchasing power of the money supply, meaning the amount of goods and services that can be purchased with the money available. This is distinct from nominal money balances, which simply count the total amount of money in circulation without accounting for changes in price levels or purchasing power.

Real Money Balances Equal The