The amount of nonborrowed reserves equals
A)the monetary base plus the amount of discount loans.
B)the amount of reserves plus the amount of discount loans.
C)the amount of reserves minus the sum of the amount of discount loans and currency.
D)the monetary base minus the sum of the amount of discount loans and currency.

Question

Quizplus · Accepted Answer

Nonborrowed reserves are calculated by subtracting the sum of discount loans and currency in circulation from the monetary base. This is because the monetary base consists of currency in circulation plus reserves (both borrowed and nonborrowed), and to find the nonborrowed portion, we need to exclude borrowed reserves (discount loans) and currency from the total.

The Amount of Nonborrowed Reserves Equals