Real money balances equal the:

Question

BlackTom AI · Accepted Answer

The question asks about the concept of real money balances.
Option a: 'sum of coin, currency, and balances in checking accounts.' This describes the nominal monetary assets held by the public, but real money balances focus on purchasing power, not just the raw stock of money.
Option b: 'amount of money expressed in terms of the quantity of goods and services it can purchase.' This aligns with the idea of real money balances, which adjust nominal money holdings by the price level to reflect actual purchasing power.
Option c: 'number of dollars used as a medium of exchange.' While dollars as a medium of exchange is related to money, real money balances concern the purchasing power after accounting for prices, not merely the turnover or existence of money as a medium of exchange.
Option d: 'quantity of money created by the Federal Reserve.' This refers to monetary creation or monetary base, not to real money balances, which are about purchasing power, not the central bank's money supply size.
Thus, option b correctly expresses real money balances by translating nominal holdings into their purchasing capacity, while the other options describe related concepts that do not capture the purchasing power aspect.

Real money balances equal the:Single choice

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