Answered

Currency in the hands of the public (C) is _________.

(A) Neither part of the money supply (M) nor part of the monetary base (B).
(B) Not part of the money supply (M) but part of the monetary base (B).
(C) Part of the money supply (M) but not part of the monetary base (B).
(D) Part of the money supply (M) and part of the monetary base (B).

Answer :

fernadiaz82

Answer:

The correct answer is the option D: Part of the money supply (M) and part of the monetary base (B).

Explanation:

On the one hand, the money supply is the amount of money available for the use of it in an economy of a country in a determinated period of time, that is, the total amount of money that can be use for the purchase of goods and services by any party. Moreover, the money supply is made by the monetary base plus a money multiplier.

On the other hand, the monetary base is the total amount of bank notes and currency coins that is being circulated in the economy and that includes the money in the hands of the public plus the commercial banks' reserves held in the central bank.

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