What term refers to the part of the money supply that is highly liquid and easy to use?

The term that refers to the part of the money supply that is highly liquid and easy to use is the monetary base. The monetary base includes the total amount of a country's currency that is in circulation in the economy, plus the reserves that commercial banks hold with the central bank. It represents the most liquid forms of money because it encompasses physical cash and balances held at the central bank that can be readily accessed for transactions.

Liquidity is a key characteristic of money, as it determines how easily money can be used for spending. The monetary base is crucial for conducting transactions, as it allows individuals and businesses to engage in everyday economic activities swiftly and without barriers.

In terms of the other options, fiscal policy refers to government spending and tax policies used to influence economic conditions but does not pertain directly to the money supply or its liquidity. The liquidity ratio is a measure of a company's ability to pay off its short-term liabilities with its short-term assets and does not specifically define the amount of money supply in an economy. Central bank reserves are part of the monetary base, but they represent funds that banks hold and are not directly used for transactions in the same way cash in circulation is.