The monetary base is ________ and _________?
Correct answer: B. Currency in circulation, banks cash reserves
- A. bank deposits, building society deposits
- B. Currency in circulation, banks cash reserves
- C. retail sight deposits building society deposits
- D. retail deposits, wholesale deposits
Explanation
The monetary base, or high-powered money, consists of currency held by the public plus commercial banks' reserves at the central bank. These are the foundation on which the broader money supply is created.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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