Which of the following defines the monetary base?

The monetary base is a fundamental concept in economics, specifically in the field of monetary policy. It is defined as the total amount of a country’s currency that is in circulation outside of the central bank, plus the reserves that commercial banks hold at the central bank. This definition encompasses both physical currency, such as coins and paper money, as well as the reserves that banks keep to meet regulatory requirements and facilitate transactions.

Understanding the monetary base is crucial for grasping how the central bank influences the economy. By adjusting the monetary base through open market operations, changing reserve requirements, or altering the discount rate, a central bank can directly impact the money supply, interest rates, and ultimately the overall economy. The monetary base is therefore a key indicator of the central bank's potential to influence liquidity and economic activity.

In contrast, total assets held by banks, private investments, and tax revenue collected do not reflect the same scope of monetary control or the direct relationship with the currency in circulation and bank reserves. The other options address different concepts that are significant in economics but do not capture the essence of what constitutes the monetary base.