If currency held by the public equals $100 billion, reserves held by banks equal $50 billion, and bank deposits equal $500 billion, then the monetary base equals:
A) $50 billion.
B) $100 billion.
C) $150 billion.
D) $600 billion.

Question

Quizplus · Accepted Answer

The monetary base includes currency held by the public plus reserves held by banks, so the monetary base equals $100 billion + $50 billion = $150 billion. The bank deposits are not included in the monetary base.

If Currency Held by the Public Equals $100 Billion, Reserves