What is the difference between broad money and base money in the context of monetary economics?

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1252724

2026-06-03 12:20

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Broad money refers to the total amount of money in circulation in an economy, including physical currency and deposits in banks. Base money, on the other hand, refers to the central bank's reserves and physical currency in circulation. Base money is a component of broad money, but broad money includes additional forms of money created through lending and deposit activities in the banking system.

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