The monetary base:
A) is the least narrow definition of money.
B) includes cash.
C) cannot always be used immediately in transactions, but is accessible.
D) is not very liquid.

Question

Quizplus · Accepted Answer

The monetary base includes physical currency, which is cash. Therefore, option B is the correct choice. Option A is incorrect because the monetary base is actually the narrowest definition of money since it only includes physical currency and reserves held by banks at the central bank. Option C is partially correct, but not entirely accurate since the accessibility of the monetary base depends on the policies of the central bank. Option D is incorrect as the monetary base is actually highly liquid, as physical currency can be easily exchanged for goods and services.

The Monetary Base