Monetary base

Definition:

Sum of the currency held by the public and reserves held by financial institutions with the Federal Reserve Banks. This is the monetary aggregate that the Federal Reserve has control over through its monetary policy. Also called High Powered Money because the effect of changes in monetary base on money supply is magnified by the money multiplier.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

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