Which statement is TRUE?

Question

Quizplus · Accepted Answer

Bank reserves are part of the monetary base, which also includes currency in circulation and deposits held by banks at the central bank. Option A is false because currency in circulation is part of the monetary base. Option C is false because the majority of the monetary base is not made up of chequable deposits but rather bank reserves and currency in circulation. Option D is false because the money multiplier is the inverse of the reserve ratio, not the ratio of the monetary base to the money multiplier.

Which Statement Is TRUE