The money multiplier is the ratio of the change in the

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The money multiplier determines how much the quantity of money will ultimately increase as a result of an initial injection of funds into the economy. It is calculated as the inverse of the required reserve ratio, which is the percentage of deposits that banks are required to hold in reserve. The required reserve ratio is set by the central bank, and the larger it is, the smaller the money multiplier will be. Therefore, the money multiplier is directly related to the change in the monetary base, which is the sum of currency in circulation and bank reserves held at the central bank. As such, the correct answer is D) quantity of money to the change in the monetary base.

The Money Multiplier Is the Ratio of the Change in the