If Reserve Bank notes are $65 billion and banks' deposits at the Reserve Bank are $22 billion, the stock of gold and foreign exchange is $74 billion, and the Reserve Bank owns $13 billion of government securities, what does the monetary base equal?
A) $76 billion
B) $87 billion
C) $65 billion
D) $88 billion
E) $74 billion

Question

Quizplus · Accepted Answer

The monetary base is the sum of Reserve Bank notes and banks' deposits at the Reserve Bank. Therefore, it equals $65 billion + $22 billion = $87 billion.

If Reserve Bank Notes Are $65 Billion and Banks' Deposits