Which measure of the money supply is referred to as the monetary base or narrow money?

The monetary base, often referred to as "narrow money," consists of the most liquid forms of money in the economy. This includes physical currency in circulation, such as coins and paper bills, along with reserves held by commercial banks at the central bank. M0 serves as this basic definition of the money supply, as it encompasses the most easily accessible forms of money, making it crucial for understanding liquidity within the financial system.

This measure is distinctive because it focuses solely on the money that is either in circulation or held in reserves, while broader categories like M1 and M2 include various forms of deposits and other monetary instruments that are less liquid. Therefore, identifying M0 as the monetary base accurately reflects its role in representing the most fundamental components of the money supply.