When the monetary base increases by $2 billion, the quantity of money increases by $10 billion. Thus, the money multiplier equals
A) 5
B) 0.2
C) 20.0
D) none of the above

Name: When the monetary base increases by $2 billion, the quantity of money increases by $10 billion. Thus, the money multiplier equals A) 5 B) 0.2 C) 20.0 D) none of the above
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Question

Quizplus · Accepted Answer

The money multiplier is calculated by dividing the change in the quantity of money by the change in the monetary base. Here, $10 billion / $2 billion = 5.

When the Monetary Base Increases by $2 Billion, the Quantity