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Homework answers / question archive / The money supply is

The money supply is

Economics

The money supply is...

a.

The monetary base times the reserve ratio.

b.

All of the other options are correct.

c.

Currency in circulation plus bank deposits.

d.

The monetary base divided by the deposit multiplier.

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The answer is (c) Currency in circulation plus bank deposits.

Money supply is the sum total of all the currency in circulation as well as all the deposits like demand deposits, time deposits, etc.

(a) is wrong as money supply is the monetary base divided by the reserve ratio.

(d) is wrong as money supply is The monetary base multiplied by the deposit multiplier.

Thus, (b) is wrong as well

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