________ is the currency in the hands of the public plus commercial bank reserves, also called ‘high powered money’.
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. Monetary base.
The Monetary Base is the currency in the hands of the public plus commercial bank reserves, also known as "high-powered money." It forms the foundation of the money supply in the economy, as it includes all currency in circulation and the reserves held by commercial banks at the central bank. The monetary base is crucial in determining the overall money supply through mechanisms like the money multiplier, where banks lend out a portion of their reserves.