The monetary base consists of the total currency in circulation outside the Federal Reserve Banks and the U.S. Treasury, plus deposits held by depository institutions at Federal Reserve Banks. This includes the physical currency and the balances held in the Federal Reserve's accounts, not gold reserves or demand deposits in the banking system.

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The Monetary Base Is

Question 29

Multiple Choice

The monetary base is

A) the sum of currency in circulation plus the amount of demand deposits in the banking system.
B) the sum of currency in circulation plus the amount of gold in Fort Knox.
C) the amount of gold in Fort Knox.
D) the amount of currency in circulation plus the amount of deposits in the Federal Reserve's 12 branches.

Correct Answer: