When currency is equal to $100 billion and reserves are equal to $200 billion, and we know that the money multiplier is equal to 2.5, then the money supply will be equal to ________.

Question

Quizplus · Accepted Answer

The money supply can be calculated using the formula: Money Supply = Money Multiplier * (Currency + Reserves). Given that the currency is $100 billion, reserves are $200 billion, and the money multiplier is 2.5, the calculation is: Money Supply = 2.5 * ($100 billion + $200 billion) = 2.5 * $300 billion = $750 billion.

When Currency Is Equal to $100 Billion and Reserves Are