The money multiplier determines how much
A) real GDP will be expanded given an increase in autonomous investment.
B) the monetary base will be expanded given a change in the quantity of money.
C) the quantity of money will be expanded given a change in the monetary base.
D) money demand will expand given a change in the quantity of money.

Question

Quizplus · Accepted Answer

The money multiplier refers to the amount by which the quantity of money in the economy increases as a result of an increase in the monetary base. It shows how banks can lend out a portion of their deposits, creating more money in the economy.

The Money Multiplier Determines How Much