The sum of cash in the hands of the public and the reserves of the banking system is known as:

Question

Quizplus · Accepted Answer

The sum of cash in the hands of the public and the reserves of the banking system is known as the monetary base. It consists of physical currency, deposits held by banks in Federal Reserve accounts, and other bank reserves. The money supply, on the other hand, is the total amount of money in circulation in the economy, which is determined by the monetary base and the money multiplier. While the money multiplier is the ratio of the money supply to the monetary base. Aggregate supply and aggregate demand are macroeconomic concepts related to the total output and spending in the economy.

The Sum of Cash in the Hands of the Public